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Transcript of Economic Enigma
Our first principle for this enigma is Markets coordinate trade. This principle states that markets usually do better than anyone or anything else at coordinating exchanges between buyers and sellers. This applies to our enigma because the name brand products are able to advertise better and then get their product on the market easier.
Generic and Name Brands
It appears that although name brand products cost more money than generic brand products, brand name products still sell more profit. Medicine is a good example of this, as perscribed name-brand medications cost more than a generic over-the-counter medicine.
The second principle of our enigma is the cost versus benefit principle. This principle tells us that people choose something when the benefits of doing so are greater than the costs. This applies to our enigma because people prefer to buy name brand products because they assume they are better than generic products just because they cost more.
The last principle for our enigma is incentives matter. The incentives matter principle simply says that people respond to incentives in generally predictable ways. Since so many brand name products are advertised a lot in the media, people will go to the store and see the product that they saw on television and be more likely to buy that product.
An economic enigma is puzzle or riddle that might be explained through an economic analysis. After your analysis is done, what do you think our enigma is?
Economic Enigma Project