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Jeebus how is this possible - is our supply chain that fragile that things like hand sanitizer (that you can make with alcohol + aloe gel) and freezers run out?
by r00fus 7y ago
Jeebus how is this possible - is our supply chain that fragile that things like hand sanitizer (that you can make with alcohol + aloe gel) and freezers run out?
Why is there no increased demand-driven supply on these things?
- hilbertseries 7y agoThere are plenty of places where you can buy hand sanitizer currently. Any sort of manufacturing takes time to ramp up. There’s a usual demand for freezers and that’s how much is typically made. If everyone decides they want a freezer there’s not enough. Why is this surprising? Sure they may start manufacturing more freezers now, but it’s going to take time and it’s not clear if demand will stay high, so who knows how much will be made. These things continue to be made, so our supply chain is not breaking, it just can’t massively scale up production instantly. I don’t know why this would be surprising.
- deathgrips 7y ago>Why is there no increased demand-driven supply on these things? Most American states prohibit price hikes during a disaster, which prevents companies from producing more during high demand.
- CaptainZapp 7y ago> Most American states prohibit price hikes during a disaster, which prevents companies from producing more during high demand. Sorry, but how exactly does that follow?
- deathgrips 7y agoIt's basic microeconomics. Firms produce widgets until the marginal profit they get from the widgets goes down to 0. The marginal profit is based on the marginal cost of producing a widget and the current price of the widget. If the price goes up, the firm can now afford to produce more widgets. If the state introduces price controls to keep the price fixed during increased demand, the company cannot afford to produce more to meet this demand and shortages will result. Normally shortages lead to increased price in the short term and in the long term lead to increased production and movement to the price equilibrium.
- kortilla 7y agoScenario: -oil shortage. -Price is capped at $50/barrel to prevent “price gouging”. -A bunch of shut down wells that are only profitable at $70+ stay shut down. Do you see how price caps prevent supply with higher production cost from entering the market?