4 ms·

If the price will have collapsed, that means demand is expected to fall, meaning whatever's causing the current demand isn't a real problem. Is that the case?

by beaner 7y ago

arpa 7y ago
Of course! Covid-19 panic is not going to last forever either way.
- beaner 7y ago
  So there's no harm in short term price rise.
  - anigbrowl 7y ago
    Of course there is, people who need them may be unable to economically purchase them. Basic price theory only obtains under specific conditions like perfect competition, perfect information, fungibility of commodities, and zero friction for market entry and exit.
    - baddox 7y ago
      Isn’t the fact that some people will be unable to afford them (or some other potentially lifesaving product) when they need them a problem that needs to be addressed either way? I feel like we’ll be talking around the problem forever if we ignore the fact that “willingness to pay” is a useful concept economically but probably doesn’t match most people’s moral intuition about who ought to get lifesaving resources.
      - anigbrowl 7y ago
        It works great for consumer goods, like coffee and beer. As soon as you start trying to apply it to things like medicine and the producer surplus comes with a body count.
    - beaner 7y ago
      If people can't afford them then they won't be purchased and the manufacturer will not make a profit. The manufacturer must price it's goods such that they will still be purchased, and higher prices in periods of high demand means people won't buy more than they need. This makes products more available, not less.
      - anigbrowl 7y ago
        Not to poor people, an extremely obvious fact that some people seem to wilfully ignore.
        beaner 7y ago
        Yes, it does. Poor does not mean abject poverty. If the good is actually a necessity, someone who is poor is unlikely to refuse spending $20 instead of $10, to avoid death.

4 ms·

If the price will have collapsed, that means demand is expected to fall, meaning whatever's causing the current demand isn't a real problem. Is that the case?

by beaner 7y ago

If the price will have collapsed, that means demand is expected to fall, meaning whatever's causing the current demand isn't a real problem. Is that the case?

arpa 7y ago
Of course! Covid-19 panic is not going to last forever either way.
- beaner 7y ago
  So there's no harm in short term price rise.
  - anigbrowl 7y ago
    Of course there is, people who need them may be unable to economically purchase them. Basic price theory only obtains under specific conditions like perfect competition, perfect information, fungibility of commodities, and zero friction for market entry and exit.
    - baddox 7y ago
      Isn’t the fact that some people will be unable to afford them (or some other potentially lifesaving product) when they need them a problem that needs to be addressed either way? I feel like we’ll be talking around the problem forever if we ignore the fact that “willingness to pay” is a useful concept economically but probably doesn’t match most people’s moral intuition about who ought to get lifesaving resources.
      - anigbrowl 7y ago
        It works great for consumer goods, like coffee and beer. As soon as you start trying to apply it to things like medicine and the producer surplus comes with a body count.
    - beaner 7y ago
      If people can't afford them then they won't be purchased and the manufacturer will not make a profit. The manufacturer must price it's goods such that they will still be purchased, and higher prices in periods of high demand means people won't buy more than they need. This makes products more available, not less.
      - anigbrowl 7y ago
        Not to poor people, an extremely obvious fact that some people seem to wilfully ignore.
        beaner 7y ago
        Yes, it does. Poor does not mean abject poverty. If the good is actually a necessity, someone who is poor is unlikely to refuse spending $20 instead of $10, to avoid death.