4 ms·

Why is it funny prices rose as demand increases? That’s Econ 101 expected behavior

graphe 3y ago
iPhones dropped in price as demand increased. Demand isn't as important as marketing, and this is probably supply limited rather than demand.
- _ea1k 3y ago
  iphones dropped in price?
  - Etheryte 3y ago
    In practical terms, yes. Adjusted for inflation, a modern iPhone costs roughly the same as the ones in prior generations, except now you get a lot more bang for your buck with better battery life, improved camera, etc.
    - shiroiuma 3y ago
      iPhones aren't a monopoly (yet): they have to compete with Android phones still, plus Apple probably prioritizes increasing their marketshare and retaining customers over maximizing profit from iPhone sales. iPhones generate a lot of other profits from things like the app store, not just from the phone sales, so pricing the phones maximally would hurt those.
- cycomanic 3y ago
  It doesn't really make sense to talk about a single product from a single supplier when talking about supply and demand. You completely leave out the competition side that drives the whole system.
  - graphe 3y ago
    A single example of gravity not working means the theory of gravity doesn't work, unless you mean that economics should not have scientific scrutiny. Economics is in a dire state of proving theories right. It only accounts for perfectly rational actors. A famous nobel prize winner was proven wrong in the same year or so and he said his graphs didn't account for it.
screeno 3y ago
Except for a the obvious counter examples. Like food in general very in demand and very cheap. Housing very in demand but very expensive. So it’s really more about who decides the prices than what.
- Ensorceled 3y ago
  Econ 101 explains those counter examples as well: Food has high demand but lots of competition and easy substitution (rice expensive? buy pasta). Housing supply is limited (by location but often artificially via regulation) and substitution is difficult (have to move).
  - graphe 3y ago
    People are not economically rational. Most people don't buy pasta when rice is expensive. Econ 101 explains rational actors in a vaccum, not gluten free, asian culture, anti Italians sentiment, or hatred of Monsanto.
    - Ensorceled 3y ago
      > Most people don't buy pasta when rice is expensive. They would if rice prices went through the roof, which they won't because people who sell rice are not stupid. Econ 101 certainly explains why you can actually buy gluten free products now (supply for demand) and why gluten free products are usually more expensive (niche market). My ECON 101 prof talked about the limitations of models and theories based on assumption of rational actors in the 1980s ... I have no idea why everyone thinks this is a gotcha.
      - graphe 3y ago
        No, they're geniuses because they're subsidized and will always be profitable. They lowered prices by taking it from your taxes. Throw in subsidies like how Clinton ruined Jamaican rice with protectionism and your supply demand and price are no longer rational. https://www.texasgateway.org/resource/201-protectionism-indirect-subsidy-consumers-producers https://www.texasgateway.org/resource/201-protectionism-indi... Econ 101 ignores subsidies which account for 100% of the big 3 crops and more like rice, and ignores any form of economics.
dgacmu 3y ago
Depends. Sometimes turkey prices drop before thanksgiving, as the producers plan their growth cycles around expected thanksgiving demand, and use freezers to meet demand. For example, see the 2022 august peak in poult placement in: https://downloads.usda.library.cornell.edu/usda-esmis/files/k643b117x/6m313630c/b2775d01s/tkha0923.pdf https://downloads.usda.library.cornell.edu/usda-esmis/files/... and https://theconversation.com/why-does-the-price-of-turkeys-fall-just-before-thanksgiving-87473 https://theconversation.com/why-does-the-price-of-turkeys-fa... The products often become loss-leaders (or close to it) to draw people into stores, so perhaps the interesting thing here is that valentines roses have a different pricing pattern -- probably because, unlike turkey, they don't freeze well, so supply is much less elastic.

iPhones dropped in price as demand increased. Demand isn't as important as marketing, and this is probably supply limited rather than demand.

_ea1k 3y ago
iphones dropped in price?
- Etheryte 3y ago
  In practical terms, yes. Adjusted for inflation, a modern iPhone costs roughly the same as the ones in prior generations, except now you get a lot more bang for your buck with better battery life, improved camera, etc.
  - shiroiuma 3y ago
    iPhones aren't a monopoly (yet): they have to compete with Android phones still, plus Apple probably prioritizes increasing their marketshare and retaining customers over maximizing profit from iPhone sales. iPhones generate a lot of other profits from things like the app store, not just from the phone sales, so pricing the phones maximally would hurt those.
cycomanic 3y ago
It doesn't really make sense to talk about a single product from a single supplier when talking about supply and demand. You completely leave out the competition side that drives the whole system.
- graphe 3y ago
  A single example of gravity not working means the theory of gravity doesn't work, unless you mean that economics should not have scientific scrutiny. Economics is in a dire state of proving theories right. It only accounts for perfectly rational actors. A famous nobel prize winner was proven wrong in the same year or so and he said his graphs didn't account for it.

screeno 3y ago

Except for a the obvious counter examples. Like food in general very in demand and very cheap. Housing very in demand but very expensive. So it’s really more about who decides the prices than what.

Ensorceled 3y ago
Econ 101 explains those counter examples as well: Food has high demand but lots of competition and easy substitution (rice expensive? buy pasta). Housing supply is limited (by location but often artificially via regulation) and substitution is difficult (have to move).
- graphe 3y ago
  People are not economically rational. Most people don't buy pasta when rice is expensive. Econ 101 explains rational actors in a vaccum, not gluten free, asian culture, anti Italians sentiment, or hatred of Monsanto.
  - Ensorceled 3y ago
    > Most people don't buy pasta when rice is expensive. They would if rice prices went through the roof, which they won't because people who sell rice are not stupid. Econ 101 certainly explains why you can actually buy gluten free products now (supply for demand) and why gluten free products are usually more expensive (niche market). My ECON 101 prof talked about the limitations of models and theories based on assumption of rational actors in the 1980s ... I have no idea why everyone thinks this is a gotcha.
    - graphe 3y ago
      No, they're geniuses because they're subsidized and will always be profitable. They lowered prices by taking it from your taxes. Throw in subsidies like how Clinton ruined Jamaican rice with protectionism and your supply demand and price are no longer rational. https://www.texasgateway.org/resource/201-protectionism-indirect-subsidy-consumers-producers https://www.texasgateway.org/resource/201-protectionism-indi... Econ 101 ignores subsidies which account for 100% of the big 3 crops and more like rice, and ignores any form of economics.

dgacmu 3y ago

Depends. Sometimes turkey prices drop before thanksgiving, as the producers plan their growth cycles around expected thanksgiving demand, and use freezers to meet demand. For example, see the 2022 august peak in poult placement in: https://downloads.usda.library.cornell.edu/usda-esmis/files/k643b117x/6m313630c/b2775d01s/tkha0923.pdf https://downloads.usda.library.cornell.edu/usda-esmis/files/... and https://theconversation.com/why-does-the-price-of-turkeys-fall-just-before-thanksgiving-87473 https://theconversation.com/why-does-the-price-of-turkeys-fa... The products often become loss-leaders (or close to it) to draw people into stores, so perhaps the interesting thing here is that valentines roses have a different pricing pattern -- probably because, unlike turkey, they don't freeze well, so supply is much less elastic.