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I always wondered about the supply and demand thing.
Why are Christmas flights always high even when you book in June??
If only 100 people can go in that flight and its sold out , what is the need to jack up prices?
Is the "demand" created because people are ready to pay?
Because Christmas is the constant in the equation. The time period never changes the way spring break can. People are ALWAYS going to want to travel then, so there is not necessarily a need to discount fares in summer.
The destinations vary, the capacity of airports vary, and so do the prices. But the date never varies.
Was a system set up just to make us work harder? I don't think so. The Chinese will come in, steal the patent, and make it inferior and cheaper. People will buy it because of price. Other prices will adjust accordingly or move their companies out of America in favor of a cheaper work force.
The basic definition of capitalism is the right to make a profit. It has nothing to do with trying to make you work harder to afford less, because there will always be people who have more then you from working smart. There are many more that don't even look at price, they have the means not to care about costs.
No matter how you look at it, there will always be haves and have nots. A free market doesn't care who has to work hard and who doesn't. It's nothing personal, it's all about greed.
Perhaps some will be motivated to go take a calculus course. After pre-algebra and algebra perhaps. Education is always a good thing. Kind of price-inelastic though.
I love math till it become too much to answer 2+2.. o wait thats common core..
Was a system set up just to make us work harder? I don't think so. The Chinese will come in, steal the patent, and make it inferior and cheaper. People will buy it because of price. Other prices will adjust accordingly or move their companies out of America in favor of a cheaper work force.
The basic definition of capitalism is the right to make a profit. It has nothing to do with trying to make you work harder to afford less, because there will always be people who have more then you from working smart. There are many more that don't even look at price, they have the means not to care about costs.
No matter how you look at it, there will always be haves and have nots. A free market doesn't care who has to work hard and who doesn't. It's nothing personal, it's all about greed.
And it will always be about greed. Just be nice to find that happy medium were a average joe can afford a big mac were only the rich could get it. Im just throwing some theories out and getting feedback and this is what forums are about. Sharing ideas and debunking our brains. Im not offended by any comments, and expected the supply and demand to popup. There is a point were the supply and demand evens out, than it becomes more about pricing that little bit more to offset the raise in wages. Then we got to add inflation to the equation as well.
So again your increase in salary means nothing. Like it knows you got the extra funds to put back but soon as you do they increase it so they will eat that up. But you get what i was trying to for, so thanks for see my point of view.
No...."it" doesn't know you got the extra funds. But YOU do, and you relax a little. That confidence causes you to spend a little more now, because of those extra funds. Result: you overspent.
There is a point were the supply and demand evens out, than it becomes more about pricing that little bit more to offset the raise in wages.
What point is that?
I mean, yes, there is the concept of market equilibrium, but my econ teacher used to say that people only buy a product if the benefit is at least equal to its cost. But because people's preferences vary widely, a lower product price will have a benefit worth the cost for more people, thus increasing demand.
All of that will never change the fact that all of us can't afford everything.
No...."it" doesn't know you got the extra funds. But YOU do, and you relax a little. That confidence causes you to spend a little more now, because of those extra funds. Result: you overspent.
Me personaly no.. I put any extra in savings for "raining days". But soon as I do, something takes it away. Like it knows we have funds now to spend. Use wages as a example. Say the whole town people make 10 a hour, so were all equal. We all can afford the same 10$ item, but the person who owns that item wants more money, greedy. They want to bump it to 20, now only those that saved could get it, when once before everybody could have. Now the wages need to increase to 20 a hour so we can all afford it again. Rinse and repeat. Thats were i draw the line.
Now, the milk man realize that he is too cheap because people are making $2 a hour. Now he jacks it up to $2.50.
That's not how pricing occurs. The increase in income is at first realized through an increase in demand. The milkman can then choose to either expand supply so that shortages will not occur (returning to equilibrium), or increase the price - inducing a fall in demand and the returning of equilibrium. She will choose the most profitable product of the two - depends on various elasticities - and operate where she is producing at the point where marginal revenue - which under perfect competition, where the firm is a price-taker, is equal to demand - meets the marginal cost of increased production.
Real markets have varying degrees of market power but that's the basic formula. For example, my extended family are all milk producers and sell into a large, agricultural co-operative which has the market power to extract rents from consumers. But the basic formula still holds relatively well.
With regards to your specific example, the elasticity of demand for whole milk is about 1.25. That means a 10% increase in price results in a 12% decrease in demand. So it's going to be unprofitable for our hypothetical milkman to increase the price, and better for her to expand production and sell to all those who could not afford whole milk in the first place. Then, perhaps with the extra profit she captures she can start producing chocolate milk.
Quote:
Originally Posted by Pub-911
Perhaps some will be motivated to go take a calculus course.
I always found it downright weird that American's never had to take at least basic calculus in high school.
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