Funny things you've overheard about beer

[troyh]

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?
.

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.

 

[thaworm69]

This was on a major question answering site. I like the "Tip" at the end!

Best Answer - Chosen by Asker
A "quarter barrel" or Pony Keg is about 7.5 US gallons (Pony kegs are half the normal sized beer keg and a quarter of a barrel), and will provide approximately 80 12 oz. glasses or beer mug of your favorite beer.
FYI:
A Keg is a small cask o barrel with a capacity of about 31 US gallons (117 litters), a keg is also known as a "Full Keg" or Barrel.
A half keg or half barrel is 15.5 US gallons , this container is the normal size of a beer keg and will provide approximately 160 12 oz. glasses or beer mug of your favorite beer.
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!

 

[TyTanium]

I do this for a living, and I love it.

Ditto! I'm loving it. Thank you for posting good economics. It's a scarce asset these days.

...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.

If only 1 bottle were produced, you'd have a scarce asset which would earn economic profit.
Economic profit attracts entrants...then more than 1 bottle is produced until economic profit goes to 0.
That point, in competitive market is P=MC
Brewers won't produce if P<MC, and if P>MC new entrants come until until P=MC

If P<>long run avg cost, then it's a) bankrupt or b) market power/monopoly

Sure, demand moves price in the short run, but in the long-term prices are a function of production costs.

 

[jerrodm]

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.

Listen, re-read the post you quoted me on: I never said that in a monopoly marginal cost is equal to price, I said marginal cost is equal to marginal revenue. Absolutely monopolies charge prices that are higher than marginal cost, which is one reason that we don't like them.

Not only is this whole conversation really off-topic, I'm sure it's bumming everyone else out. I'm happy to PM you with all kinds of discussion on microeconomic theory, let me know if you'd like to continue that way.

Either way, I think I'll call it quits on here so we can all go back to laughing at those who don't know a roggenbier from a RIS.

 

[jerrodm]

Ditto! I'm loving it. Thank you for posting good economics. It's a scarce asset these days.

Cheers mate! I don't often get to expound on my own area of expertise on the brew forums, hard to pass up the opportunity when it presents itself. If only I were a chemist, or an electrical engineer--those guys have all the fun on this site!

 

[JoeyChopps]

Dammit college made me take economics I come here for fun. Hey what do you call someone that is good at math and nothing else in college? An economics major. Ba-zing.

 

[jerrodm]

Ouch. Unfortunately it's worse than that. Economists are mostly mathematicians who couldn't cut it in number theory...

On a more serious note, everyone looking for more sober, well-thought out discussion of issues pertinent to homebrewing should really read this thread.

You're welcome.

 

[DrunkleJon]

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!

Or have a CO2 setup and really like the beer. With the old pump taps it will be oxidized terribly within the week

 

[Hamsterbite]

EPIC ECONOMIST RAP BATTLES OF HISTORY!!!

 

[SiriusStarr]

EPIC ECONOMIST RAP BATTLES OF HISTORY!!!

KEYNES...versus....SMITH. FIGHT.

I would totally listen to that...

 

[rifraf]

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.

Ah had it backwards. Thanks!

 

[alanlis]

http://m.youtube.com/#/watch?feature=fvwrel&v=d0nERTFo-Sk

KEYNES...versus....SMITH. FIGHT.

I would totally listen to that...

 

[troyh]

Sure, demand moves price in the short run, but in the long-term prices are a function of production costs.

True, but as economists like to say, in the long-term we're all dead. You are assuming we're already in the long-term but we're not. And the fact that beer is still a profitable business proves that. Profit is not fixed, some breweries are more profitable than others and not just because their costs are lower.

 

[SiriusStarr]

http://m.youtube.com/#/watch?feature=fvwrel&v=d0nERTFo-Sk

Oh my god this is amazing... :rockin:

 

[HawksBrewer]

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.

 

[rifraf]

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.

Beer?! I thought you wanted a Bud Light!

Wait. That might be backwards.

 

[Skeptidelphian]

It's getting dismal in here...

 

[JoeyChopps]

A buddy of mine that only drinks bud light refers to ying ling as ding ling.

 

[gcdowd]

I just missed this whole econ part and I'm pissed. I am a fellow econ major and missed this discussion. Fortunately I'm drunk and do not wish to restart the argument. Go economics!

 

[rodwha]

"where'd the funny beer things go?"

 

[craigger64]

"where'd the funny beer things go?"

dude, we're on page 57..........we used up all the funny

 

[Doctor_Wily]

dude, we're on page 57..........we used up all the funny

No! Moar Funnehs!!!!

 

[WesleyS]

New thread title: Boring and useless things you've heard about beer economics. All three of you interested in that conversation can have fun. Go for it.

 

[Thomas007]

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.

I think I paid about $3 for a bottle of this:

Midas Touch Golden Elixir is a beverage based on the residue found on the drinking vessels in King Midas’ tomb. Our recipe highlights the known ingredients of barley, white Muscat grapes, honey and saffron.

I thought that was kind of steep, but I guess I should be happy the DFH guys aren't economists?

 

[allaway]

Not beer, but tonight at a local brew pub's Octoberfest there was a guy and his wife promoting their Honey wine that they will be selling in PA. I asked the guy if it was similar to Mead, and he said " well it is Mead, but we call it honey wine". Ok....I'm not a Mead guy, so maybe this is an excepted term in the Mead world. Then I say " That must require a lot of Pre-planning given how long Mead takes to age." (Now keep in mind I think he said they make something like 43 different flavors). " Nope, our honey wine is ready to be shipped 3 months after starting a batch."

Again....not a Mead guy, but raw ingredients to shipping in 3 months? He said they use a special yeast technique that has it ready to go that quick. I don't doubt he was telling the truth, but that seems awful quick to me.

For the life of me I can't remember the term he used when he described this yeast usage technique....think it was "S" something, but it was at a beer festival so I was already loosing my short term memory:cross:

I have a couple bottles of this mead in my fridge (I live on the NH/VT border and have visited the meadery because the GF is into that sort of thing), and it is pretty tasty stuff. I think their "regular" meads are pushed out pretty quickly, but they have some other meads that age longer, IIRC. They have a bunch of really neat flavors, and a really wide range of dry to sweet. My one complaint is that some of their meads tend to be a bit hot.

 

[TyTanium]

You are assuming we're already in the long-term but we're not

Sure, this is always debatable...when do we move from short to long. Probably somewhere in the middle b/c of TONS of new entrants.

And the fact that beer is still a profitable business proves that.

Is it? I'm not convinced. Dang breweries are all private, tough to get good numbers.

...some breweries are more profitable than others and not just because their costs are lower.

Agreed...competitive advantage can be w/cost and/or revenue.

Wait, what were we talking about? MChomebrew < MCcommercial, therefore time to brew (hooray for sunk costs!)

 

[troyh]

I think I paid about $3 for a bottle of this:

I thought that was kind of steep, but I guess I should be happy the DFH guys aren't economists?

They understand economics. That's why they have to charge market prices, not a price based on whatever ingredients they decide to put into it. My point is that people who don't understand economics are arguing that the price of beer is based solely on the cost of the ingredients.

I was trying to dispel a myth about the free market as it applies to beer because I've found most of HBT to be populated with intelligent people interested in these things. But I'm now reminded that it is still the Internet where misinformation wants to stay alive.

The irony is that this thread is to make fun of people who aren't knowledgeable about beer. But most here want to remain ignorant about the economics of beer. If you don't care about the pricing of beer you're no better than the college student waitress who doesn't care what an IPA is.

 

[TyTanium]

They understand economics. That's why they have to charge market prices, not a price based on whatever ingredients they decide to put into it. My point is that people who don't understand economics are arguing that the price of beer is based solely on the cost of the ingredients.

I was trying to dispel a myth about the free market as it applies to beer because I've found most of HBT to be populated with intelligent people interested in these things. But I'm now reminded that it is still the Internet where misinformation wants to stay alive.

The irony is that this thread is to make fun of people who aren't knowledgeable about beer. But most here want to remain ignorant about the economics of beer. If you don't care about the pricing of beer you're no better than the college student waitress who doesn't care what an IPA is.

Come on man, don't be a tool. Strawman argument.

 

[Doctor_Wily]

whelp, unsubscribing from this thread. I unfortunately am not an economist type of nerd, lol. Cheers everyone!

 

[troyh]

Sure, this is always debatable...when do we move from short to long. Probably somewhere in the middle b/c of TONS of new entrants.

You're correct, we're in the middle. The long-term is a theoretical end, it generally doesn't happen. When everyone jn the world thinks all beers taste the same that day will have come. That won't happen in any of our lifetimes. Even BMC couldn't make that happen.