• This is a political forum that is non-biased/non-partisan and treats every person's position on topics equally. This debate forum is not aligned to any political party. In today's politics, many ideas are split between and even within all the political parties. Often we find ourselves agreeing on one platform but some topics break our mold. We are here to discuss them in a civil political debate. If this is your first visit to our political forums, be sure to check out the RULES. Registering for debate politics is necessary before posting. Register today to participate - it's free!

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

What determines the price of consumer price of goods and services?


  • Total voters
    14

pbrauer

DP Veteran
Joined
Jun 6, 2010
Messages
25,394
Reaction score
7,208
Location
Oregon
Gender
Male
Political Leaning
Liberal
What determines the price of consumer price of goods and services?

  • The law of supply and demand
  • People
  • Other
 
The law of supple and demand is a theory. How would a theory be directly or indirectly involved in the establishment of prices? Don't you need people in the equation?
 
The law of supply and demand is just another way of saying people.
It's the cross of how much someone wants "something", based on how much of that "something" there is.
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.
 
There are lots of factors. The economy, inflation, elasticity, Game Theory, supply, demand, etc. So, in my opinion, depending on the product, there is no one thing you can point to and say "that's the reason the price is $X.XX".
 
Last edited:
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.
 
The willingness of people to pay the asking price.

Go to Bourbon Street and a beer is $4. Go to Joe's Pool Hall, in Jerkwater, USA and a beer is $2.

The difference, you ask? The folks that frequent Joe's Pool Hall aren't paying four bucks for a beer. The folks that are partying on Bourbon Street will.

The Royal Sonesta Hotel, on Bourbon Street is $150 a night, $200 a night for a balcony. The Motel 6 on Old Gentilly Road is $50 a night.

It's all about what people are willing to pay.

FYI, if you visit New Orleans, I recommend the Hampton Inn on St. Charles. The street car line runs right in front of the hotel and will take you straight to the French Quarter. Not only is it a buck-and-a-quarter and about nine dollars cheaper than a cab, riding the street car is just some cool ass touristy **** to do when you visit New Orleans.

This concludes your free New Orleans tour guide crap for the evening.
 
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.

Prices come down to two parties - the seller and buyer - deciding on what the goods is worth to them. All the other stuffs are just reasons we come up with to explain why each party determine the worth of the goods that they do.
 
Last edited:
What determines the price of consumer price of goods and services?

  • The law of supply and demand
  • People
  • Other

All of the above.
 
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.
 
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?
 
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.
 
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.

vvx said:
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:
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.
 
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.
 
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?
 
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.
 
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.
 
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.
 
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.
 
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:
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.
 
Back
Top Bottom