Avu's Econ Blog

PED at Price Club November 29, 2009

This is a handsome Korean boy at Price Club

This is a handsome Korean boy at Price Club

Earlier today I had the pleasure of spending an afternoon with two handsome young Korean boys as we went to Price Club to buy some treats. Price Club is, for those that don’t know, a small shop on the east end of the island which predominantly deals in foreign goods. These goods are mostly food and drink, and almost all from the United States. Among the goods included are Wonka bars, Old El Paso, and Thansgiving treats. To the point however, three young men enter this store looking to buy chocolate and soda. We are all students at Canadian Academy, from relatively affluent families, seeking to buy chocolate and soda for no reason other than our own personal enjoyment. So, in other words, these are luxury goods, and not necessities, as we are not purchasing this food for needed nourishment. Needless to say we can live without these goods, however delicious they may be. We came across Wonka “Whipple Scrumptious Caramel Delight” chocolate bars and, reminiscing on better days when our parents would buy these for us, we were in the mood to purchase some. The bars were priced at 525 yen for normal shoppers and at 500 yen for Price Club card carryers. With this price tag, one handsome young Korean boy misread it and said happily, “At 500 yen I will buy 3 bars!” Upon the realization of his mistake, he was taken in with shock. At 500 yen, he was willing and able to purchase 3 bars. At 525 yen, he was still able to buy 3 bars, but he was not willing to. He was not even willing to buy two bars. At 525, this hansome young Korean boy bought one chocolate. This shows just how elastic the market is. Since he does not need, but simply wants the bar, his demand is going to be more driven by price than any other consideration. Of course, this is not necessarily a change in price, not at all, but psychologically the price has increased by 25 yen for our handsome young Korean boy.

Upon the "shift" in price, quantity changes dramtically

After eating a third of the chocolate bar, the handsome young Korean boy announced that he is suffering from diminishing marginal utility with each bite, but that’s another story for another time.