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> Except basic microeconomics demonstrates that profit is maximized when production is raised to the point where marginal revenue equals marginal cost. Basic m
by stephencanon 4y ago
> Except basic microeconomics demonstrates that profit is maximized when production is raised to the point where marginal revenue equals marginal cost.
Basic microeconomics demonstrates that this holds true _in a competitive market_. The record profits tell us that prices have come decoupled from marginal cost, from which we can conclude that major egg producers have been allowed to merge to a point such that the market is no longer competitive.
- mech765 4y agoThis is the short term during a market disruption where supply is constrained due to an avian flu outbreak. Long term prices will fall back to normal. The difference between the cheap eggs of 2 years ago and the expensive eggs of today is not that too many egg companies merged. Blaming all high prices on anticompetitive behavior is throwing the baby out with the bathwater.
- didgeoridoo 4y ago> in a competitive market Yes, hence my point about semiconductor fabs vs. hen cloacas. You can’t just point to a single product type undergoing a price shock and declare the market has failed. Preferences are sticky, but substitutes abound. People will adjust their preferences, and egg consumption will drop. If prices stay high, other products will begin to take the place of eggs in various contexts. We aren’t entitled to cheap eggs, but neither are the producers guaranteed record profits beyond a quarter or two. This too shall pass.
- stephencanon 4y agoPreference for eggs is remarkably sticky; there effectively is no substitute good for most uses.