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

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

  1. #21
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    Re: What Determines The Price Of Consumer Price Of Goods And Services?

    Quote Originally Posted by Kandahar View Post
    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.
    There are many things determine consumer price:

    • To make more profit than is currently being made.
    • To cover increased costs of producing a product or service.
    • Shelf life
    • Too much inventory
    • Branding
    • New model about to be released
    • No. of competitors
    • Speculation on futures markets
    • Etc.


    Think no one will pay $8/gal. for gas?? If Iran were invaded, you just might see prices higher than that and people lining up to purchase the stuff.

  2. #22
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    Re: What Determines The Price Of Consumer Price Of Goods And Services?

    Quote Originally Posted by pbrauer View Post
    There are many things determine consumer price:

    • To make more profit than is currently being made.
    • To cover increased costs of producing a product or service.
    • Shelf life
    • Too much inventory
    • Branding
    • New model about to be released
    • No. of competitors
    • Speculation on futures markets
    • Etc.


    Think no one will pay $8/gal. for gas?? If Iran were invaded, you just might see prices higher than that and people lining up to purchase the stuff.
    You'd see us ditch oil faster than a stray litter of deformed kittens and a Thorium reactor would pop up on every corner.
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  3. #23
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    Re: What Determines The Price Of Consumer Price Of Goods And Services?

    Quote Originally Posted by pbrauer View Post
    There are many things determine consumer price:
    [*]To make more profit than is currently being made.
    The amount of profit that can be made is determined by supply and demand.

    [*]To cover increased costs of producing a product or service.
    Supply.

    [*]Shelf life
    Supply.

    [*]Too much inventory
    Supply.

    [*]Branding
    Demand.

    [*]New model about to be released
    Demand.

    [*]No. of competitors
    Supply.

    [*]Speculation on futures markets
    Demand.

    Think no one will pay $8/gal. for gas?? If Iran were invaded, you just might see prices higher than that and people lining up to purchase the stuff.
    ...which would be a result of a much lower supply (or anticipated lower supply) as a result of Iran's oil fields going offline.
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  4. #24
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    Re: What Determines The Price Of Consumer Price Of Goods And Services?

    Quote Originally Posted by vvx View Post
    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.
    Other variables affect the slope of the curves, but price levels are going to have very definite impacts on the quantity supplied and the quantity demanded. All of the variables that you might think of are tied up in those two curves.
    Last edited by DrunkenAsparagus; 11-28-11 at 03:23 PM.
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  5. #25
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    Re: What Determines The Price Of Consumer Price Of Goods And Services?

    Quote Originally Posted by Aunt Spiker View Post
    You'd see us ditch oil faster than a stray litter of deformed kittens and a Thorium reactor would pop up on every corner.
    sounds like a plan. i'd prefer to do it publicly without jacking up the price of the transitional energy source and thus momentarily hurting our economy even more, however.

  6. #26
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    Re: What Determines The Price Of Consumer Price Of Goods And Services?

    Quote Originally Posted by Kandahar View Post
    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.
    According to supply-demand theory the supply and demand would come to the equilibrium at all prices if market is left on its own.

    The reason the price is $3 is because the Petroleum companies decide to sell it at $3. And for $3/galleon, they sell a certain amount to the consumers who are willing to buy it at that price. If the price goes up, they may sell less quantity depending on the demand elasticity of fuel. Competition in the oil industry is suspect given the fact that they seem to have a tacit agreement to not have a price war on each others. If there were perfect competition, then prices would come close to the supply costs + economic costs.
    Last edited by nonpareil; 11-28-11 at 06:46 PM.
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  7. #27
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    Re: What Determines The Price Of Consumer Price Of Goods And Services?

    Quote Originally Posted by nonpareil View Post
    According to supply-demand theory the supply and demand would come to the equilibrium at all prices if market is left on its own.
    No. Any attempt to charge more than the market value (e.g. trying to sell it for $8 per gallon) will result in a surplus, because stations will be unable to sell their gas. Any effort to charge less than the market value (e.g. selling it for $1 per gallon) will result in a shortage, as eager consumers hoard as much gas as they can at the bargain prices. The market value is the price at which the quantity supplied and the quantity demanded are equal.

    The reason the price is $3 is because the Petroleum companies decide to sell it at $3. And for $3/galleon, they sell a certain amount to the consumers who are willing to buy it at that price. If the price goes up, they may sell less quantity depending on the demand elasticity of fuel.
    Right, in other words the demand determines their price.

    Competition in the oil industry is suspect given the fact that they seem to have a tacit agreement to not have a price war on each others.
    Oil is arguably the most commoditized product in the world, with many buyers and sellers. The price wars are constant, and are the reason a barrel of oil trades the same everywhere in the world...usually down to the penny.

    If there were perfect competition, then prices would come close to the supply costs + economic costs.
    Not necessarily, if more barrels of oil are being demanded at that price than what the oil companies can supply.
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  8. #28
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    Re: What Determines The Price Of Consumer Price Of Goods And Services?

    Since all commodities are linked to the stock market, it determines price of goods. Resources are bet on like race horses. Of course prices are going to fluctuatute. Then their are times when the stock market is manipulated to recieve the price they want for their goods, it happens and I'm not getting into it.

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  9. #29
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    Re: What Determines The Price Of Consumer Price Of Goods And Services?

    Quote Originally Posted by radcen View Post
    Supply can be manipulated.
    Both supply and demand can be manipulated. But, supply and demand still determine the price of consumer price of goods and services. Much of the arguments presented herein against the supply/demand answer describe influences on supply and influences on demand.

    For example, the government can influence supply through regulation/restriction and can influence demand through public relations or by forcing the public to buy something the public doesn't want. An oligopoly can influence supply. A marketing campaign can influence demand.
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