GrogNerd
mean old man
Not if you understand economics. The price to make something has nothing to do with its value. If it did, brewers would be brewing saffron beer and we'd pay $1000 a 6-pack for it.
not all "we" would
Not if you understand economics. The price to make something has nothing to do with its value. If it did, brewers would be brewing saffron beer and we'd pay $1000 a 6-pack for it.
Not if you understand economics. The price to make something has nothing to do with its value. If it did, brewers would be brewing saffron beer and we'd pay $1000 a 6-pack for it.
pm5k00 said:LOL, I understand economics just fine, hence my statement. Yes the value of something, defenitly has something to do with price of making it, saying otherwise is absurd.
Try looking at a Mexican market, your can get 6-8 threads of saffron for $10.
LOL, I understand economics just fine, hence my statement. Yes the value of something, defenitly has something to do with price of making it, saying otherwise is absurd.
Try looking at a Mexican market, your can get 6-8 threads of saffron for $10.
The cost to make something is only relevant to how profitable a business is. Businesses can't charge whatever they want for their products, they have to be able to make them for less than what people value them at.
Why aren't pencils made out of solid gold and priced accordingly? Because no one would buy them, which means their value is low even though their cost is high.
People have also been purchasing "limited edition" metal Starbucks gift cards with $50 on them for over $1000 on ebay (wish I was making this up).
Value is quite high even though he cost to make is very low.
JordanThomas said:LOLWUT?
People are so stupid. I hope no one on this forum bought one of those...
Not if you understand economics. The price to make something has nothing to do with its value. If it did, brewers would be brewing saffron beer and we'd pay $1000 a 6-pack for it.
Value is extremely subjective, if I think a $14 4 pack is the best beer in the world then its a great value, if its just OK its a rip off. But to price a 4.7% wheat beer the same as a 9% IIPA when the price of ingredients are 1/3 the cost is crazy, and a bad value (to me).
jerrodm said:Not to be a dick, but that's not exactly how "economics" works. At a competitive market equilibrium (which I think you can make a case for the BMC market being close to), the price of a good IS directly tied to the cost of production; specifically, price will equal the long-run marginal cost of production, which also equals the long-run average cost of production. You're right in your point that price is also tied to demand (the reason economists love markets so much is that they're a tool for equating supply and demand), but that doesn't change the fact that the price charged for a good is directly tied to the cost required to make it.
Your example about saffron beer is a little bit of a different case, since that would be a differentiated good (as most craft brews are) that's only produced by one place--for example, only one brewery makes Pliny the Elder, and no one else can really copy it. In that case, price doesn't need to be equal to marginal cost, but it's still connected to it. It's a little more complicated but I'm sure you're not that interested in the explanation.
All that to say that yes, all else equal, beers that require costlier inputs (like those with higher ABV) should cost more. According to economics.
Imported beer isn't priced higher because it costs more to import it. It's imported because people here are willing to pay more for it. And we'll see that change as people realize domestic beer is worth paying more for. Imported beer will drop in price but many on this thread will conclude that shipping suddenly got cheaper. And if the value of imported beer drops below the cost to make and ship it then imported beer will largely disappear and people here will conclude that ships don't exist anymore.
This thread could appear in an economics forum titled "Funny things you hear people say about economics". ;-)
Btw, saying "...but I'm sure you're not that interested in the explanation" is being a dick.
You have it backwards. A business can afford to sell a product for the marginal cost to make it so they will continue to do it. But if their costs suddenly increase (hop prices go up) they can't just charge more, they will stop making it or go out of business. You seem to think every consumer is standing there in aisles looking at products and quickly summing the manufacturing costs to see if they should buy the product.
Brewers making higher ABV beers know people will pay more for them so they make them. They don't just make any beer they want and force people to buy it. Again, if they could they'd increase their costs to charge more. Yet they are always working to lower their costs. Are they idiots?
Btw, saying "...but I'm sure you're not that interested in the explanation" is being a dick.
jerrodm said:OK, I just didn't think you wanted a big soliloquy about how under monopoly conditions the equilibrium point is reached where marginal revenue is equal to marginal cost, and price is a function of demand but not supply...do you want me to attach graphs and show why this is the case?
.
I do this for a living, and I love it.
...if only one bottle of Pliny the Elder was produced per year or if the supply was so high that bottles of it were falling from the sky. People would pay the exact same price for it in both cases because the manufacturing costs are the same? Please show me your graphs that prove this.
You have it backwards. Under a monopoly, marginal cost is not equal to price, monopolies can charge much higher prices. You mean the opposite of a monopoly: a commodity.
So your theory is that there is a situation where supply doesn't affect the price. So it wouldn't matter if only one bottle of Pliny the Elder was produced per year or if the supply was so high that bottles of it were falling from the sky. People would pay the exact same price for it in both cases because the manufacturing costs are the same? Please show me your graphs that prove this.
Ditto! I'm loving it. Thank you for posting good economics. It's a scarce asset these days.
Tip: Don't buy a half-barrel unless you're having 150-200 people and know that, at least half of them are beer drinkers!
EPIC ECONOMIST RAP BATTLES OF HISTORY!!!
Why are they stupid? Because YOU don't value it? Update: the cards actually had $400 on them and also gave other benefits and were sold for $450 by Starbucks. One person paid $1000 on eBay for one. http://money.cnn.com/2012/12/10/news/companies/starbucks-card-ebay/
I bet lots of people here pay prices for beer that a lot of people think is stupid. A man dying of thirst in the desert would happily pay $100 for the last bottle of water. Is he stupid too? I'd say he'd be stupid not to pay it.
KEYNES...versus....SMITH. FIGHT.
I would totally listen to that...
TyTanium said:Sure, demand moves price in the short run, but in the long-term prices are a function of production costs.
tl;dr. Back to beer stuff. So this guy walks into a bar, and then, well, he orders a beer.
I think I missed the punchline.
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