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That doesn’t really make sense. Raising prices not supported by demand would result in less profit in theory. For instance, prices may go up in a supply disrupt
by rcme 4y ago
That doesn’t really make sense. Raising prices not supported by demand would result in less profit in theory. For instance, prices may go up in a supply disruption, but the loss in sales means suppliers earn less. So if prices were artificially high, it would actually be more profitable to lower them.
- naasking 4y agoThey wouldn't lose sales on necessary staples like eggs, milk and such, all of which have seen significant increases.
- rcme 4y agoDemand for milk and eggs is definitely elastic. And we're seeing inflation in other goods that aren't staples as well.
- candiodari 4y agoNot at the price points they're at. If milk halved in price, would milk consumption significantly rise? Not at all. So yes, milk consumption is price elastic, but not at these prices. They're too low. Same goes for eggs, bread, ...
- rcme 4y agoI could definitely see milk consumption increasing if prices were lower. Tons of products use cheap fats that could use butter instead if it were cheaper. If milk products were cheap enough, you could use it as animal feed. If it was really cheap you could burn it for energy. Also worth noting is that the dairy industry is subsidized by the government, so the amount of milk being consumed is already higher than you would expect if the price was set at the market price. For eggs, similar things could occur. Soy lecithin is a common emulsifier, but could be replaced by egg lecithin if eggs were cheaper than soy.