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Tim Harford’s The Undercover Economist familiarises readers with the fundamental principles of economics that shape our daily lives. Let’s see key lessons from the book.
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Simple decisions like buying coffee are influenced by complex economic systems that involve global markets, pricing strategies, and more.
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Businesses use scarcity to justify high prices even when they make no changes in the product quality, like when businesses open outlets in prime locations.
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Companies use price-targeting strategies, like offering different product varieties to different customers, to maximise their profits.
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Corrupt individuals and institutions impact economic growth. Misallocation of resources and government failures hinder investments and lead to mistrust.
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Perverse incentives are rewards that encourage certain behaviors that ultimately lead to negative outcomes, like corruption. Understanding incentives is important.
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When one has more information than another, it results in inefficiencies and affects markets. For instance, when sellers use information about the buyers to charge more.
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