The scrooge and the billionaire.

There are always two type of people you could see in this world. One has a character of Scrooge from Christmas Carol. Paying a dollar more always seems as if it is the baddest news to them in this world. Another one behaved like a billionaire. Despite of having limited money, nothing could be felt by them if they are being asked to pay a dollar more, let alone twice or thrice the price. In economics, the former one is called “inelastic demand” and the later one is “elastic demand”. You may not have any clue that how do these two types of people are related to our flower market or perhaps you do as you are exactly one of the people I mentioned earlier.

In the first few days of flower market, we could see the sellers often charge a high price for the goods to the point that we couldn’t stop and question in our mind whether the good really worth that amount of money. Why do they choose to do that?

To know this, we must first know that they would do an auction every year few months before the opening of flower market. As you know, land are limited in nature, not all people could have a chance to open their stall. Therefore, the authority must allocate the resources efficiently. For that, they had go through the price competition which is auction and invested enormous amount of capital into it. After going through so much steps, finally they could open their stall, and guess what is the first thing they would do? Of course to gain back the lost! But where should they capture the sales from?

Definitely, not from the "Scrooge"who are immensely sensitive towards price. They know clearly in their mind that there will be a huge discount at the last day of the market, therefore, they will not do any consumption. Instead, simply wandering around, targeting goods and purchase them at the last day.

Apparently, from “the billionaires”, visitors with inelastic demand. Stall owners will draw all their money out. As aforementioned, they do not care much, or even though they do, they care little. Why would they buy it even the price are so high? There are various reason it could be explained. Firstly, he/she desperately, urgently needs that product, or else his/her would be incomplete! Secondly, he/she cannot find the same goods anywhere, it’s one of a kind! Thirdly, the price of the goods only occupied small proportion of their income! The list could go on. Of course, who doesn't know that there is going to be a huge discount, but also it could be a reason that "they don't want to be squeeze and get stuck in the crowd".

Then when it comes to the last day, especially the last few hours, as mentioned earlier, huge discount are offered by almost all the stalls, unless they want to make a lost.

In our real world, we always wonder how the price are being set every time when we see the price tag. In fact, seeing customers elasticity is how they set the price, just like aforementioned.