The Market for Lemons - EDB National Economics Short Film Competition (2012)

So back in Junior College, I took part in the EDB National Economics Short Film competition and to my surprise our team managed to clinch the Top 5 Finalist Award. I had a lot of fun filming this with friends, as we tried to incorporate micro-economic theories into our everyday lives. 

Story Synopsis:

A group of 4 friends get together and rant on about one other's life stories and experiences, when one of them, Jeremy the Economist, begins to connect the dots and elaborates on that Economics can be used to explain their misfortunes. Justin, Sarah and Enoch listens to Jeremy in shock, awe (and a little bit of horror) as they discover how their experiences are actually classic examples of Imperfect Information; and why they all seem to be facing problems with 'obtaining the wrong good' (lemons). 

Economic Summarised Explanation:
Asymmetric information occurs when one party in an economic relationship has more or better information than the other. This is a form of market failure since the party with information can use it at the expense of the other, resulting in a welfare loss for the ignorant party. In Enoch's unfortunate encounter, the ability of his date to withhold vital information from him caused him to end up with a less suitable substitute (disguised guy) that definitely did not maximize his utility. As for Justin, his ignorance about the intricacies of women's shampoo was capitalized upon by the sales promoter, whose avid promotion led to his over-consumption of shampoo (i.e. he bought all the shampoos) resulting in a loss of welfare. Hence, with maximum welfare not achieved, this reflects how asymmetric information is a market failure.