4 ms·
This is not true. If it were, then inflation would run away. Prices influence demand, so companies can't just raise prices whenever they want. But capital in it
by bayesian_horse 4y ago
This is not true. If it were, then inflation would run away. Prices influence demand, so companies can't just raise prices whenever they want. But capital in itself also has a relationship between supply, demand and price, often called rent-seeking behavior.
If you are interested in this kind of topic, look into microeconomics, then macroeconomics.
- mrtranscendence 4y agoSupposing that a company could always exactly offset rising costs by raising prices assumes that such a company was not setting an optimal price in the first place. If they could increase profits by raising prices, they would have done so already. Low labor costs aren't what's keeping McDonalds from charging $15 for a cheeseburger, it's the fact that nobody would buy a cheeseburger for $15.