Funny and highly informative in equal measures.
In "Freakonomics: What Prostitutes Can Teach About Economics," economist Steven Levitt recounts an anecdote about a conversation he had with a college-educated woman who had left a $80,000-a-year computer programming job to become a prostitute.
The core of the story revolves around the challenge of setting prices in business:
In "Freakonomics: What Prostitutes Can Teach About Economics," economist Steven Levitt recounts an anecdote about a conversation he had with a college-educated woman who had left a $80,000-a-year computer programming job to become a prostitute.
The core of the story revolves around the challenge of setting prices in business:
- The Pricing Dilemma: When the economist asked her how she set her prices, she gave a common answer, similar to that of many CEOs, stating she simply checked the internet and matched the rate of other women, settling on $300 an hour
- Economic Optimization: The economist suggested she wasn't optimizing her price, noting that she seemed indifferent when her customer-only phone line rang and sometimes didn't even pick up the phone. This indifference suggested she wasn't charging the profit-maximizing price for her services, as a local monopolist should always want to sell one more unit at the same price.
