View Poll Results: All othe things being equal, when you raise price, what happens to demand?

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  • When you raise price, all other things being equal, demand decreases

    11 84.62%
  • When you raise price, all other things being equal, demand increases

    1 7.69%
  • I do not believe that the laws of supply and demand apply to labor

    1 7.69%
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Thread: If Labor Exists on a Supply Demand Curve, what happens when the price is raised?

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    If Labor Exists on a Supply Demand Curve, what happens when the price is raised?

    Currently the score is 31 to 2 in favor of labor existing on a supply / demand curve. So, if Labor follows the rules of Supply and Demand, then what happens when, all other things being equal the price of labor is raised?

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    Re: If Labor Exists on a Supply Demand Curve, what happens when the price is raised?

    demand decreases in my opinion . but if people are stupid enough to increase it ... maybe increases
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    Re: If Labor Exists on a Supply Demand Curve, what happens when the price is raised?

    Demand obviously decreases... In case this is a backwards way of getting to a debate in minimum wage, let me be more direct to make it more interesting:

    If you raise the minimum wage, supply of labor (the laborers) may increase, but the demand for the same labor, at those higher wages, will surely decrease to some degree in the short-term. For the labor which is necessary, the additional cost will be passed along to the consumers by increasing the prices of the product/service, which will affect those collecting minimum wage the most in their expenditures. Those who own and or manage the business generally increase their profits as a percentage of their costs, so they'll pocket the difference. The end result is minimal to no net change for those receiving minimum wage and higher profits for the upper middle class.

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    Re: If Labor Exists on a Supply Demand Curve, what happens when the price is raised?

    Just depends........price of labor works differently than the price of goods

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    Re: If Labor Exists on a Supply Demand Curve, what happens when the price is raised?

    Quote Originally Posted by Fisher View Post
    Just depends........price of labor works differently than the price of goods
    Really?

    Why?

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    Re: If Labor Exists on a Supply Demand Curve, what happens when the price is raised?

    If all suppliers of a particular product raise their prices, and depending on how much the price goes up, demand may not change, depending on the segment you are currently servicing.

    If you offer a common product, one that falls into a 'necessity' category, chances are your demand will not change unless you price yourself way over market.

    Don't know about anyone else here, but toilet paper is not something I'm willing to give up.
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    Re: If Labor Exists on a Supply Demand Curve, what happens when the price is raised?

    Quote Originally Posted by cpwill View Post
    Really?

    Why?
    Because McDonald's needs a certain number of employees to operate whether they have to pay then $7.25 or $9.00 an hour. On the other hand, if the $1 menu becomes the $1.25 menu, people will buy fewer McDoubles because their products are more discretionary than the labor that produces it.+

    Raising the minimum wage is largely a false economic promise because of what the bulk of minimum wage earners spend their money on, but we should do it anyway for the benefit of those who do actually have to survive on it and, hopefully, because it lifts people above the Earned Income Credit qualification tables.

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    Re: If Labor Exists on a Supply Demand Curve, what happens when the price is raised?

    Quote Originally Posted by cpwill View Post
    Really?

    Why?
    Because labor usually directly affects production, while goods are typically the result of production and do not directly affect production.

    But if the goods in question do affect the production, demand is usually unaffected by price. If I need corn in order to make corn chips at my factory, my demand for corn will not be affected by the price of corn. The price of my product, however, will often go up to account for the increased price in order to maintain my profits. If I run a trucking company, and diesel prices increase, I will not less demand for diesel (for my routes must continue to exist in order for me to continue to stay in business). So the end result is that the cost of my services increase.

    Labor works the same way as those examples above. Companies require employees in order to provide their services or produce their goods. They cannot profit without them. So instead of demand for labor decreasing, the more likely result is that the cost of services and goods increases.

    Decreases in demand would initially only occur if the labor involved is not essential to maintaining production levels. However, the increased prices for goods and services could affect demand for those goods and services (mostly in the short-term, though, as the economy would eventually adjust to the new baseline cost of labor as it has every other time the minimum wage was raised). If the increased cost of those goods decreases demand for those goods, then the demand for production decreases and if the demand for production decreases, the demand for labor decreases.

    That's a series of "ifs", however, thus making the answer of "depends" the most accurate one to the question of whether or not increasing the price of labor will decrease the demand for it. The supply part is unchanged and an increase in minimum wage prevents there from being any legal alternative cheaper labor. That has a major affect on the whole situation. Not to mention other cost cutting approaches which exist that can counter the increased wage prices (fast food restaurants often lower the quality of their ingredients in order to offset the increased labor costs so that production can remain constant and demand won't decrease since people who eat fast food are relatively unconcerned with quality anyway, for example)
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    Re: If Labor Exists on a Supply Demand Curve, what happens when the price is raised?

    Quote Originally Posted by cpwill View Post
    Currently the score is 31 to 2 in favor of labor existing on a supply / demand curve. So, if Labor follows the rules of Supply and Demand, then what happens when, all other things being equal the price of labor is raised?
    Yet actual studies have returned mix results.
    “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”
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    Re: If Labor Exists on a Supply Demand Curve, what happens when the price is raised?

    It depends on whether the demand is elastic or inelastic.

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