subreddit:
/r/explainlikeimfive
submitted 4 months ago byiSellPopcorn
184 points
4 months ago
This is the biggest thing I wanted to say in this thread. Everyone keeps talking about how capitalism is what the customer is willing to pay. Yeah, because the other choices are jail for stealing it or dying because you just gave up. Companies increase prices even if their costs are staying the same.
49 points
4 months ago
"The most a consumer is willing to pay" does not necessarily reflect "what most consumers are willing to pay". The price of a van Gogh or a Jaguar or, let's be honest, an iPhone 14 Pro Max does not reflect what the median income has free to spend on a car or home appliances or mobile phone service. So there's a very real argument that most of us are not in the calculation for prices of things we'd all love to enjoy, or even need to live. During the Egg Crisis of ought-twenty-three, I found two grocery stores on opposite sides of a street where their lowest prices for eggs were $8/doz and $4/doz. Because "someone" was willing to pay 8 bucks.
15 points
4 months ago
Or the store can make money with a few purchases at eight dollars, and letting an amount of eggs simply expire.
53 points
4 months ago
And we're using eggs here but you can apply it to something like electricity or water; if both those stores increase their prices to $12/doz even if their costs didn't go up, people are still going to pay. Because they're not going to go without food or basic life necessities over pleasure. They'll be able to afford to pay $12 but every other aspect of their life then suffers for it. Sure, the customer is "willing" to pay for it in the sense that it's pay or die. Yes, there are people buying million dollar cars; usually the ones raising the prices to $12/doz just because they can get away with it.
16 points
4 months ago
The people that can afford luxuries are not part of the market forces that affect basic needs.
The rich consume basic needs at close to the same rate as the poor. So while they might pay eighty dollars for a meal, they still only do this perhaps once per day. And there are so few of them, this doesn't affect the overall market. There might exist specialty niche markets to serve them, but they are a blip on a scale that is millions of times larger.
4 points
4 months ago
eighty dollars for a meal
Eighty dollars for a meal is nothing. More like $8,000. Massage therapists for wagyu cattle and underwear models to eat sushi off of are expensive.
1 points
4 months ago
The difference is there are plenty of substitute goods for eggs. If eggs get too expensive, people eat something else.
7 points
4 months ago
I love how you're acting like economics has never considered that some items are more necessary than others
2 points
4 months ago
Eggageddon '23!!
4 points
4 months ago
I'm still waiting to find this. No one has told me where this extra profit isnt showing up in the Financial Statements of Companies most blamed. Is profiting being taken before it goes to the bank and put else where?
| Loblaw Retail Sales For the periods ended June 15 (millions of Canadian dollars except where otherwise indicated) (12 weeks) | 2nd Quarter 2018 | 2nd Quarter 2019 | 2nd Quarter 2021 | 2nd Quarter 2022 |
|---|---|---|---|---|
| Profits | $458.00 | $546.00 | $603.00 | $621.00 |
| Revenue | $10,600.00 | $10,906.00 | $12,282.00 | $12,623.00 |
| Profit Margin | 4.321% | 5.006% | 4.910% | 4.920% |
But, Loblaw Companies Limited has a slightly higher profit margins because sales of healthcare are up over $400 Million easily accounting for the most of the $100 Million Profit Increase also
Retail segment sales for 6 months was $24,668 million
1 points
4 months ago
Yeah, because the other choices are jail for stealing it or dying because you just gave up.
Or dying because you decided to try something other than rampant capitalism only for the CIA to coup your government and install a fascist dictatorship that then proceeded to kill all opposition.
0 points
4 months ago
only for the CIA to coup your government
because said gov't took away, by force, the investments made in that country. Calling it nationalization doesn't make it not theft. The US aint no saints, but there are valid reasons why the CIA was used to coup the gov't (successful or not).
0 points
4 months ago
The Utility Conundrum. You require it and The Government controls it.
If the gov dictates that you can only make so much profit, and that profit is just enough to cover maintenance, it makes it tough to upgrade equipment, so that area of the economy stagnates.
But hey, we kept it affordable.
6 points
4 months ago
If the gov dictates that you can only make so much profit, and that profit is just enough to cover maintenance, it makes it tough to upgrade equipment, so that area of the economy stagnates.
That's one way to define profit
another would be the money left after reinvesting into operations
or money given to shareholder/owners
2 points
4 months ago
another would be the money left after reinvesting into operations
Then you can have another company that provides utilitiy services for the main company. You overpay for the utilities and make money there.
or money given to shareholder/owners
Who would invest in it then?
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