What Drives Price?
Monday, March 26, 2012
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Title : What Drives Price?
link : What Drives Price?
RW response:
The sentiment that at that spot tin never endure a deficiency in ask is a pretty uncomplicated concept.
If something is an economical good, that is, it is something consumers desire, it volition receive got a price. This is inwards contrast to a non-economic good, say, a pile of dust that no ane is interested inwards consuming.
Think of it this way. Have y'all ever seen a BMW car or a mansion on a California beach that can't be sold for 10 cents?
Markets clear, that is at that spot is a cost for every economical good. There may endure people who don't similar the marketplace cost but at that spot is a price.
How could a marketplace non clear? If at that spot are condos selling for $100,000 in addition to at that spot are buyers for that type of condo (and they are aware of the condos) that are willing to pay upwards to $110,000, why wouldn't they purchase the condos?
If at that spot is a condo possessor demanding $10 1000000 for a condo that others are willing to pay alone $110,000 for, it but way the electrical flow condo owner prefers the condo to a greater extent than than the bid price, but for economical goods at that spot are e'er bid prices in addition to inquire prices where exchanges tin accept place.
As for what drives prices to a greater extent than production or consumption, at ane level, they both tin receive got an immediate impact. The to a greater extent than of something produced volition hateful downward pull per unit of measurement area on prices. At the same time, increased ask volition hateful upward pull per unit of measurement area on prices.
Longer term, the consumer is inwards the driver's seat. Influenza A virus subtype H5N1 producer has to worry well-nigh the costs of production, if the costs are greater than what a consumer is willing to pay for a proficient the proficient won't endure produced.
You are now reading the article What Drives Price? with the link address https://inspirationsbymeforyou.blogspot.com/2012/03/what-drives-price.html
Title : What Drives Price?
link : What Drives Price?
What Drives Price?
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Saturday Mail Bag |
John W. emails:
Dear Sir,
I'm a regular reader of EPJ.
I of late watched your video well-nigh Say's Law. Could y'all perhaps explicate a piffling to a greater extent than how the procedure of marketplace clearing causes it to endure untrue that at that spot tin ever endure a deficiency of demand?
What drives cost more: production or consumption, in addition to why?
As a instant question, am I agreement y'all correctly to tell that markets e'er clear?
As a instant question, am I agreement y'all correctly to tell that markets e'er clear?
Thank y'all really much!
Sincerely,
John W.
RW response:
The sentiment that at that spot tin never endure a deficiency in ask is a pretty uncomplicated concept.
If something is an economical good, that is, it is something consumers desire, it volition receive got a price. This is inwards contrast to a non-economic good, say, a pile of dust that no ane is interested inwards consuming.
Think of it this way. Have y'all ever seen a BMW car or a mansion on a California beach that can't be sold for 10 cents?
Markets clear, that is at that spot is a cost for every economical good. There may endure people who don't similar the marketplace cost but at that spot is a price.
How could a marketplace non clear? If at that spot are condos selling for $100,000 in addition to at that spot are buyers for that type of condo (and they are aware of the condos) that are willing to pay upwards to $110,000, why wouldn't they purchase the condos?
If at that spot is a condo possessor demanding $10 1000000 for a condo that others are willing to pay alone $110,000 for, it but way the electrical flow condo owner prefers the condo to a greater extent than than the bid price, but for economical goods at that spot are e'er bid prices in addition to inquire prices where exchanges tin accept place.
As for what drives prices to a greater extent than production or consumption, at ane level, they both tin receive got an immediate impact. The to a greater extent than of something produced volition hateful downward pull per unit of measurement area on prices. At the same time, increased ask volition hateful upward pull per unit of measurement area on prices.
Longer term, the consumer is inwards the driver's seat. Influenza A virus subtype H5N1 producer has to worry well-nigh the costs of production, if the costs are greater than what a consumer is willing to pay for a proficient the proficient won't endure produced.
Thus the article What Drives Price?
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You are now reading the article What Drives Price? with the link address https://inspirationsbymeforyou.blogspot.com/2012/03/what-drives-price.html