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Most business only absorb the minimum amount of margin loss they can, and for very short terms. No business aims to operate at a loss unless propped up by outsi
by yunohn 5y ago
Most business only absorb the minimum amount of margin loss they can, and for very short terms. No business aims to operate at a loss unless propped up by outside investments.
All businesses will increase prices to maintain the profits they need, up until what the market will bear - which is why taxes will also not end up pushing it too far, the gov isn’t stupid.
- colinmhayes 5y agoAgain, it depends on elasticities. Businesses can't just raise prices and expect demand to remain at old levels. People quickly substitute goods and services in the face of price changes. In the case of mcdonalds price increases cause people to cook or eat food that doesn't need to be prepared. In the case of rent, supply is fixed, so landlords are already charging monopoly prices. There is very close to zero wiggle room for landlords to raise prices.
- yunohn 5y ago> There is very close to zero wiggle room for landlords to raise prices. This is disproved very easily by reality - most places have increasing rent YoY. Same goes for house prices. Because of low supply and large demand, like you say, landlords can charge monopoly prices. Not sure why you claim they don’t go up?
- colinmhayes 5y agoRental demand in desirable areas keeps going up as wealth inequality increases and yuppies continue to want to live in urban areas.
- kd0amg 5y ago> This is disproved very easily by reality - most places have increasing rent YoY. Same goes for house prices. All this proves is that evolving market conditions lead to changes in price. Try charging 2030's market-rate rent in 2021, and see how many offers you get.