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"I don't know about that industry, but generally prices don't depend on the sellers' costs." What you're saying is true only if the revenue at the optimal pric
by nycticorax 11y ago
"I don't know about that industry, but generally prices don't depend on the sellers' costs." What you're saying is true only if the revenue at the optimal price is higher than the seller's costs. If the revenue at optimal cost is lower than the seller's costs, then generally the product won't be produced. Therefore if the product is still being produced, the seller's costs put a lower bound on the revenue. If the volume is fixed, this means a lower bound on the price. If the volume is small, this lower bound can be high.