Proud Non Voters

[Dissipate]

Originally posted by: LunarRay
Dissipate,

This is total B.S. No firm is a "price-maker", because every firm, no matter what product they sell accepts the market price.

This statement is not accurate. Not when you say 'every'. (IMO)

There is a reality associated with 'elasticity'.

I think you are referring to the "cutting supply to jack up price" myth. That has already been addressed in Capitalism, the page numbers are listed above.

 

[Dissipate]

Originally posted by: LunarRay
Dissipate,

This is total B.S. No firm is a "price-maker", because every firm, no matter what product they sell accepts the market price.

This statement is not accurate. Not when you say 'every'. (IMO)

There is a reality associated with 'elasticity'.

In the context that I am referring

I don't really know what 'elasticity' has to do with that article, but I'd like to point out this statement:

Make your price
This is perhaps most true in pricing, a particularly vexing challenge in today's hypercompetitive marketplace.

Not only is it a "vexing challenge" but it is impossible. Furthermore, this guy is basically talking about increasing the value of a product, and hence the demand for it, not "making prices." If firms could really "make a price" they would charge a trillion dollars for one good or service.

But firms don't charge a trillion dollars for a soda or a furniture set. Why? Because ultimately it is consumers who decide how much to pay for something. A firm can attempt to increase demand for its products, setting itself apart from other brands, which then increases the price they can charge, but they certainly can't "make a price." This is why Coke can charge a higher price than your store brand soda. Generally speaking, in the eyes of the consumer Coke is a higher quality product, but this does not mean that Coke has "made a price", it has simply made quality, or perceived quality.

 

[LunarRay]

Originally posted by: Dissipate

Originally posted by: LunarRay
Dissipate,

This is total B.S. No firm is a "price-maker", because every firm, no matter what product they sell accepts the market price.

This statement is not accurate. Not when you say 'every'. (IMO)

There is a reality associated with 'elasticity'.

In the context that I am referring

I don't really know what 'elasticity' has to do with that article, but I'd like to point out this statement:
Elasticity has to do with all products in all conditions

Make your price
This is perhaps most true in pricing, a particularly vexing challenge in today's hypercompetitive marketplace.

Not only is it a "vexing challenge" but it is impossible. Furthermore, this guy is basically talking about increasing the value of a product, and hence the demand for it, not "making prices." If firms could really "make a price" they would charge a trillion dollars for one good or service.
Not so! In context, the supplier always sets the price and the demander reacts to it. You may argue the demander causes the supplier to set a price somewhere near his marginal cost (he usually won't sell at a loss) but in the absence of direct or indirect (substitute) competition dealing with essential products (say oil) there is almost an inelastic reality and thus a price maker exists setting a price up to a point where marginal profit diminishes and the demanders (cuz they can't afford it) at this point cause the supplier to reset the price or reduce his fixed cost base - which is also the suppliers decision. As Laffer might say, If I can sell 100 gizmos out of my garage and net 1000$ it is far better than selling 200 out of a store and net 500$ (assume gizmos to be something with out any or much competition [at the moment] and substitues to gizmos do not exist)

But firms don't charge a trillion dollars for a soda or a furniture set. Why? Because ultimately it is consumers who decide how much to pay for something. A firm can attempt to increase demand for its products, setting itself apart from other brands, which then increases the price they can charge, but they certainly can't "make a price." This is why Coke can charge a higher price than your store brand soda. Generally speaking, in the eyes of the consumer Coke is a higher quality product, but this does not mean that Coke has "made a price", it has simply made quality, or perceived quality.
Coke and other like product are quite demand elastic. There is a relationship between the scarcity of the product and substitutes and its need with its demand and its price. Often, and depending on the product's relationship to life demands the price is set according to and by the whim (with some reasonableness) of the supplier. Medical services come to mind.

Now I pretty much know what you'll say next and I'm tired so I'll bid you good night and again say 'always' 'never' and similar words while having infinity as the criteria shouldn't be used..

 

[Dissipate]

Originally posted by: LunarRay

Originally posted by: Dissipate

Originally posted by: LunarRay
Dissipate,

This is total B.S. No firm is a "price-maker", because every firm, no matter what product they sell accepts the market price.

This statement is not accurate. Not when you say 'every'. (IMO)

There is a reality associated with 'elasticity'.

In the context that I am referring

I don't really know what 'elasticity' has to do with that article, but I'd like to point out this statement:
Elasticity has to do with all products in all conditions

Make your price
This is perhaps most true in pricing, a particularly vexing challenge in today's hypercompetitive marketplace.

Not only is it a "vexing challenge" but it is impossible. Furthermore, this guy is basically talking about increasing the value of a product, and hence the demand for it, not "making prices." If firms could really "make a price" they would charge a trillion dollars for one good or service.
Not so! In context, the supplier always sets the price and the demander reacts to it. You may argue the demander causes the supplier to set a price somewhere near his marginal cost (he usually won't sell at a loss) but in the absence of direct or indirect (substitute) competition dealing with essential products (say oil) there is almost an inelastic reality and thus a price maker exists setting a price up to a point where marginal profit diminishes and the demanders (cuz they can't afford it) at this point cause the supplier to reset the price or reduce his fixed cost base - which is also the suppliers decision. As Laffer might say, If I can sell 100 gizmos out of my garage and net 1000$ it is far better than selling 200 out of a store and net 500$ (assume gizmos to be something with out any or much competition [at the moment] and substitues to gizmos do not exist)

But firms don't charge a trillion dollars for a soda or a furniture set. Why? Because ultimately it is consumers who decide how much to pay for something. A firm can attempt to increase demand for its products, setting itself apart from other brands, which then increases the price they can charge, but they certainly can't "make a price." This is why Coke can charge a higher price than your store brand soda. Generally speaking, in the eyes of the consumer Coke is a higher quality product, but this does not mean that Coke has "made a price", it has simply made quality, or perceived quality.
Coke and other like product are quite demand elastic. There is a relationship between the scarcity of the product and substitutes and its need with its demand and its price. Often, and depending on the product's relationship to life demands the price is set according to and by the whim (with some reasonableness) of the supplier. Medical services come to mind.

Now I pretty much know what you'll say next and I'm tired so I'll bid you good night and again say 'always' 'never' and similar words while having infinity as the criteria shouldn't be used..

Wrong, wrong, wrong. Elasticy of demand is irrelevant.

A common example of a confused definition is: ?Monopoly exists when a firm has control over its price.? This definition is a mixture of confusion and absurdity. In the first place, on the free market there is no such thing as ?control? over the price in an exchange; in any exchange the price of the sale is voluntarily agreed upon by both parties. No ?control? is exercised by either party; the only control is each person?s control over his own ac­tions?stemming from his self-sovereignty?and consequently his control will be over his own decision to enter or not to enter into an exchange at any hypothetical price. There is no direct control over price because price is a mutual phenomenon. On the other hand, each person has absolute control over his own action and therefore over the price which he will attempt to charge for any particular good. Any man can set any price that he wants for any quantity of a good that he sells; the question is whether he can find any buyers at that price. Similarly, of course, any buyer can set any price at which he will purchase a certain good; the ques­tion is whether he can find a seller at that price. It is this process, indeed, of mutual bids and offers that yields the daily prices on the market.

MES Chapter 10, it also has a critique of the neo-classical concept of a monopoly price, which is equally absurd.