The book I chose for my report is The Undercover Economist by Tim Harford. Unlike a textbook, The Undercover Economist explains economics in a way that is easy to understand and understand. The undercover economist provides a logical explanation of the world economy by expressing his opinions on the world economic system. The author uses real-life situations and examples to explain how the economy in the world affects our lives. The book I chose The Undercover Economist by Tim Harford explains the economy by relating it to situations in our daily lives. The book is used to explain how supply and demand influence the market, product prices, where we live and what we buy. Tim Harford also expresses his personal opinions on what should be done to improve the world. The first chapters explain how supply and demand affect the prices of the products we buy. The book explains that product prices are set by the consumer and are not based on production costs. Scarcity is what determines the price of products. For example on page 10, “Customers at rush hour are so desperate for caffeine and in such a hurry that they are virtually price blind. The willingness to pay top dollar for cheap coffee drives high rent, not the other way around.” Companies use a strategy to determine how much the consumer is willing to pay for a product. To achieve this, companies offer multiple products that may look many different ways but are more or less the same basic product. This pricing strategy shows that consumers set the prices of goods by choosing which products to buy. Prices are considered relative to the individual, the term expensive varies from person to person. Every... middle of paper......, adding more buses, improving the subway system or even adding bike lines to the streets. These positive externalities could make driving less attractive. Government has the power to improve the quality of life of its citizens in many ways. After reading The Undercover Economist I found that author Tim Harford does a great job of connecting economics to everyday life. I felt the most important term in the book was scarcity. Scarcity could easily be described as supply and demand. Since the author is a British writer, he often links the story to Britain by using the British monetary system and naming places. Overall the book was easy to understand. Unlike a textbook, it provided examples that I could relate to my life. I would definitely recommend The Undercover Economist to others who want to learn how the economy affects our lives.