Economic Enigma Types of economic theory

Economic enigma is a more perplexing or perplexing state of the economy that is difficult to explain. These circumstances occur in our daily lives and are frequently difficult to comprehend and explain. Economic enigmas are examined using cost-benefit analysis, which considers scarce forces and incentives. To overcome and comprehend the ambiguity involved in economic conundrum, comprehensive and proper analysis is required.

Why do individuals frequently pay more or rather more for brand products and services when generic products of the same standards are available at a lower cost or rather lower price? In this case, name brand is valued by the consumers than the store brand (span, 2011).

Under what circumstances would people pay more for brand products over the generic ones;

1. The belief by the majority that the name brand is of higher quality than the store brands. In most instances, the store brands are always cheaper as compared to the name brands. Most people under this kind of puzzle tend to argue that they believe in greater benefits in purchasing and consuming the same products.

Name brands majorly use the incentive matter in convincing customers to buy and consume these products. In most instances, they use appealing advertisements to convince the public that their products are of high quality and the result is assured. An example is the use of attractive and successful people in the society to convince the public that they are entitled to the same upon the utilization of the same product.

An example of this such enigma is the variability in prices of commodities within the supermarkets and shops whereby one is tempted, and brainwashed that when you buy the most expensive product on the shelves, it has the highest quality and benefit as compared to the rest.

This puzzle is thus confusing as individuals are treated to expensive goods to assume the higher quality of a given product. In some cases, consumers have reported dissatisfaction with these brand products in most cases arguing of a better generic product quality than them. Some products though may only differ in prices, but quality and quantity of consumptions are standardized and should be the same i.e. medicine.

How concepts we learn in class are applicable to this kind of economic enigma;

1. Cost and benefits.

The cost of a commodity determines the demand for a product. Thus when the price of a product goes up, the need for the same goes down in this case most people will assume an improvement in the quality of the product. As to this consumers may soon turn back to consume more of the product at this high cost.

People will also assume that the expensive the product the more the benefits and so would buy more of the same as compared to the generic products. Some of this benefits are always advertised and this has been able to convince the consumers to consume more of the same despite the high prices involved.

2. Supply and demand;

Supply and demand of a commodity is affected by the price of the same in the market. The lower the price, the higher the demand and vice versa is true. Companies and business will always try to alter this by increasing the supply of the goods when the prices shoot up so as to maximize profitability. Loyal customers are thus treated to high prices despite their ability to gate the same generic products at a cheaper cost.

3. Consumer taste and preferences

Some users are so loyal to a product that despite its high prices in the market they will forego the cheaper ones to purchase them.

4. Marginal analysis.

In the marginal analysis, consumers tend to believe that there is increased benefit of a product about its increase in prices thus will still consume them over store products.

5. Firm profit maximization.

Most companies will tend to hike the prices of their products so as to realize profitability. Thus there may be deliberate increase in prices without the necessary increase in quality and quantity. Despite such scenarios, some individuals will still choose to purchase them in accordance with their big market name of other generic products.

In most situations, the economic enigma may arise due to the confusion created or belief in the quality of goods and loyalty to a specific brand thus consumers tend to consume the same products over a period despite possible price increments (Ryan, 2011).

Conclusion.

To conclude with, economic enigma exists in every financial market and is highly exploited by companies or businesses that have established their brands and did have a name on the market. They are thus assured of certainty in the market despite their price increments. Most of these companies exploit the world of advertisement to protect their name and brand. This loyalty to these products ensures and motivates them to price their products at whatever cost. A puzzle is thereby created when you try to analyze why an individual may go on to consume a very expensive product because of its brand name at the expense of a generic one with an almost same level of quality and accomplishment.

Works Cited

Spann, Othmar. Types of economic theory. Routledge, 2011.

Ryan, Dan. Enigma: The Caldwell Series. Author House, 2011.