Examining Economic Enigmas

Enigma – a puzzling problem or mystery

ES: Explicitly assess information and draw conclusions

#1 - Why do people pay for bottled water when it is so much more expensive than tap water?

Why do people choose bottled water?

What are the BENEFITS and how do they outweigh the COSTS?

What are incentives for buying water?

Do consumers still want bottled water, or have people switched to filter and Sigg bottles?

Do consumers consider the environmental impact of plastic water bottles, even if they are recycled?

#2: Why are there so many Starbucks so close together?

- Why do people choose Starbucks?

- Why are the stores profitable?

- What is the incentive to having so many stores in so many locations?

- How does Starbucks decide when/where to open a new store?

- How far would people drive for Starbucks? Would they pass a Wawa and Dunkin to purchase the more expensive coffee?

Bottled Water

People Choose – Consumers are willing to pay more for “clean” water

All Choices involve Costs – the benefits of clean/healthy water outweigh costs

People respond to incentives – its is portable and healthy unlike soda/juice

Economic Systems - X

Voluntary Trade Creates Wealth – Consumers continue to buy it!

Consequences of Choices Lie in Future – environmental impact of the bottle

Starbucks-http://www.youtube.com/watch?v=wfHpU2DMNOU

People Choose – People like the taste of Starbucks coffee & their specialty drinks

Ex: Chestnut Praline Latte

All Choices involve Costs – So many different people of all ages buy Starbucks the benefits outweigh costs

People respond to incentives – Time savings and product consistency are major incentives!

Economic Systems – Starbucks adds one store at a time in response to demand

Voluntary Trade Creates Wealth – Consumers want convenient locations to purchase coffee

Now – think of your own Enigma!

• Why don’t more people carpool? (Third data sheet in folder)

• Why do people pay to have their bags checked at the airport?

• Why do people boy the new iphone 6 when their phone still works?

• Why do people buy video games/movie when they can rent them?

• Why do people buy items in store when they can get them cheaper on-line?