Mar 17, 2009

Things to take into account when buying an ipod

I’ve been suffering from post-purchase anxiety. I just spent a lot of money for an ipod. As Mankiw would say, I am obviously better off now, otherwise I would not have engaged in the transaction…Of course, this will be true over time only if I have perfect information about the value of the utility I’ll derive from this (amazing) product…

Anyway, I love my ipod and I think I bought it at the right place, i.e. Québec. It cost me $399.99 (Canadian) plus a 5% federal VAT and a 7.5% provincial VAT for a total of $451. That is CHF420 at today’s exchange rate. Compared to the CHF575 I would have needed to buy it at Manor that is definitely a good deal. Too bad I am not able to get a tax refund like it used to be possible here…But I am also traveling to New York, so I had to compare the prices there too…It costs $399.99 (US) plus an 8.375% State sales tax. That is a total of $433 or CHF513, way more than what I paid!

Why is the Ipod cheaper here? The answer is sticky prices. When Apple set their prices, the Canadian and American dollar were worth the same thing (hence the same price of 399$ in both currencies), now you can buy $1.27 CAN with $1 US! So I’m quite happy about my decision to buy it here, not only did I save money but I gave more to my government and less to Apple and none to the US government! What a deal! Post-purchase anxiety has been rubbed off!

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