View Poll Results: What determines the price of consumer price of goods and services?

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  • The law of supply and demand

    18 60.00%
  • People

    4 13.33%
  • Other

    8 26.67%
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Thread: What Determines The Price Of Consumer Price Of Goods And Services?

  1. #11
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    Re: What Determines The Price Of Consumer Price Of Goods And Services?

    Quote Originally Posted by pbrauer View Post
    What determines the price of consumer price of goods and services?

    • The law of supply and demand
    • People
    • Other
    All of the above.
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    Re: What Determines The Price Of Consumer Price Of Goods And Services?

    It also depends on what 'goods' you're referring to. . . are they manufactured or raw materials for manufacturing? is it regulated, requiring approval to be sold and purchased or is it less of an issue to pass the right of ownership . . .and so on.

    Gas comes about it's price differently than precious metals - and hand crafted wood furniture is priced differently than the aforementioned two . . . and so on - it's complicated.
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    Re: What Determines The Price Of Consumer Price Of Goods And Services?

    Quote Originally Posted by Aunt Spiker View Post
    It also depends on what 'goods' you're referring to. . . are they manufactured or raw materials for manufacturing? is it regulated, requiring approval to be sold and purchased or is it less of an issue to pass the right of ownership . . .and so on.

    Gas comes about it's price differently than precious metals - and hand crafted wood furniture is priced differently than the aforementioned two . . . and so on - it's complicated.
    Gas, OIL. The demand dropped worldwide by 20-30% in2008 and the price did not change proportionately. Control of the distribution can regulate supply and demand. Free markets are required for supply and demand to work. The Treasury and the PPT are not the only force large enough and liquid enough to adjust/manipulate/control some markets. I'm not talking a conspiracy, just good business and an eye and direction for profit, don't you think?

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    Re: What Determines The Price Of Consumer Price Of Goods And Services?

    Quote Originally Posted by DaveFagan View Post
    Gas, OIL. The demand dropped worldwide by 20-30% in2008 and the price did not change proportionately. Control of the distribution can regulate supply and demand. Free markets are required for supply and demand to work. The Treasury and the PPT are not the only force large enough and liquid enough to adjust/manipulate/control some markets. I'm not talking a conspiracy, just good business and an eye and direction for profit, don't you think?
    That's strictly elasticity. They can just cut supply, jack the prices up, and no one can do ****. At least that's my understanding of it.
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    Re: What Determines The Price Of Consumer Price Of Goods And Services?

    Supply can be manipulated.

  6. #16
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    Re: What Determines The Price Of Consumer Price Of Goods And Services?

    Quote Originally Posted by pbrauer View Post
    I disagree. People make the price, their decision may involve supply and demand, but there is no law of nature that causes the price to change.
    People make the price in the short term, but in a bigger sense supply and demand ALWAYS governs the price. Why doesn't the local Exxon station owner start charging $8 per gallon for gas? Because no one will buy it from him, and he'll go out of business. Businesses try to set their prices based on what will make them the most money...which is almost always based on supply and demand.

    Quote Originally Posted by vvx
    But, what about when their is product differentiation, when the consumer base isn't knowledgeable, and advertising comes into play? Say for example, the tablet market. Do you buy the ipad or do you buy an android? Do you understand the differences? Are there many different manufacturers of Ipads or does only one company product them?
    These things are important considerations as well, but to some extent they are included in supply and demand. For example, even if I don't know much about tablets, I can probably estimate that a Kindle Fire is more valuable than a paperback book and less valuable than an iPad. If my estimate of its value is less than what Amazon is charging, I won't buy one. If my estimate of its value is greater than what Amazon is charging, I will (if I have the cash). This is still based on supply and demand. Supply is determined by the number of other vendors selling the same (or similar) products who are willing to underprice one another. Demand is determined by the number of other people who are willing to outbid me for the Kindle Fire.
    Last edited by Kandahar; 11-27-11 at 09:35 PM.
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    Re: What Determines The Price Of Consumer Price Of Goods And Services?

    Quote Originally Posted by Kandahar View Post
    People make the price in the short term, but in a bigger sense supply and demand ALWAYS governs the price. Why doesn't the local Exxon station owner start charging $8 per gallon for gas? Because no one will buy it from him, and he'll go out of business. Businesses try to set their prices based on what will make them the most money...which is almost always based on supply and demand.
    Nope. That gas station owner won't go out of business if everyone else is selling gas at $8/gal and it doesn't matter what the supply is, the price is determined by competition.

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    Re: What Determines The Price Of Consumer Price Of Goods And Services?

    Quote Originally Posted by pbrauer View Post
    Nope. That gas station owner won't go out of business if everyone else is selling gas at $8/gal and it doesn't matter what the supply is, the price is determined by competition.
    But why would everyone ELSE be selling it at $8 per gallon, if not because of supply and demand? "Competition" is just another way of saying supply and demand. The reason gas sells for approximately $3 per gallon, rather than approximately $8 per gallon, is because 3 dollars is approximately the price where the amount of gas that consumers are willing to buy, and the amount of gas that suppliers are willing to sell, are equal.
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    Re: What Determines The Price Of Consumer Price Of Goods And Services?

    Quote Originally Posted by vvx View Post
    Supply and demand is a theory requiring perfect competition, and a customer base that knows everything about the product. You'd usually see it come out in textbook description when there are many sellers of a good and the good doesn't vary much. For example, maybe in "nuts and bolts" and similar categories. But, what about when their is product differentiation, when the consumer base isn't knowledgeable, and advertising comes into play? Say for example, the tablet market. Do you buy the ipad or do you buy an android? Do you understand the differences? Are there many different manufacturers of Ipads or does only one company product them?

    You start to move more to monopoly pricing, where a company prices it's product to produce maximum revenue. Where the price may be higher in order to increase profits, as the decrease in quantity sold doesn't offset the greater profits from the higher price. You no longer have a price/quantity at the intersection of supply & demand, but rather a different point on the demand curve.

    So, I vote other. Supply and demand are variables, but ultimately not the only thing that determines the consumer price.
    These are possible inefficiency in a free market pricing system, which I won't get into. However, that does not change the fact that a certain number of people are going to respond to certain incentives. Prices will affect how much people buy and produce certain products. We all respond to incentives differently. This is what changes the slope of the curve, but when has a price increase made you want to buy a product more; has a job offer where you would be doing the same thing under the same conditions for less pay drawn you away from your current one?
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    Re: What Determines The Price Of Consumer Price Of Goods And Services?

    Quote Originally Posted by DrunkenAsparagus View Post
    These are possible inefficiency in a free market pricing system, which I won't get into. However, that does not change the fact that a certain number of people are going to respond to certain incentives. Prices will affect how much people buy and produce certain products. We all respond to incentives differently. This is what changes the slope of the curve, but when has a price increase made you want to buy a product more; has a job offer where you would be doing the same thing under the same conditions for less pay drawn you away from your current one?
    I agree with you, I might say something like oh, "Supply and demand are variables, but ultimately not the only thing that determines the consumer price." Oh, I did say that already? Bummer. Yes, it does affect decisions.

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