Week 10: EWOT

I find myself sitting at the Quidditch World Cup Saturday morning, frantically attempting to do all of my homework in between games.  While reading through this week’s Econ critical reading, I walked by one of the very limited shops set up on Randall’s Island surrounding the field, with literally hundreds of people waiting to eat grossly overpriced waffles that have less taste than those that I normally get at Douglass.  I decided to stop and take note at why so many people had decided to wait in such a long line for such low quality food, and discovered that it was due to almost limitless supply and unreasonably low prices.  The value people put on the waffles increased significantly because the price lessened the burden of the long wait and they knew they would end up getting as many as they wanted. 

                However, I noticed a fundamental problem with the way the waffle stand was conducting business.  Assuming at first that the waffle stand was operating in order to make a profit, they were grossly under-pricing their highly-demanded goods.  Because of the nearly limitless supply of waffles and waffle customers (there were two food stands to accommodate 4,000 spectators and players over the course of a day), it is realistic to state that the owner should have increased his prices to above market-price in order to take advantage of the opportunity for additional profit.  Furthermore, they only had three workers in the stand, creating a situation in which the marginal benefit of hiring one additional worker was phenomenally high.  This would have also benefitted because some people viewed the time spent in line as too much of a marginal cost, and if the wait time could have been halved far more people may have gotten waffles.

                Later, I went to the other food seller to discover what they were selling: turkey legs, hot dogs, burgers, soda, French fries, and chips.  Their line was just as long, but they were adequately staffed to the point where the marginal cost of each worker probably equaled the marginal benefit and had prices clearly above market level ($4 hot dogs and $11 turkey legs) in response to the high demand.  Even though many people observed that they were more impressed with the waffle stand for having as many customers as the alternative, more traditional food offered in tent, I knew that it was clearly the other way around simply from knowing basic economics.