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This is not how economics works. There are supply curves and there are demand curves, then there is the quantity supplied and quantity demanded. If the demand f

by foota 11y ago

This is not how economics works. There are supply curves and there are demand curves, then there is the quantity supplied and quantity demanded. If the demand for a product shifts up (increases) due to basic income, then the quantity demanded increases. Then inventories of that product decrease, indicating that the firms could start producing more and still be able to sell it. They do this, but there costs go up, since each unit that they produce now costs them more on average. [assuming they are producing with increasing marginal costs, which is generally true]

rorykoehler 11y ago
Everything will be automated. Cost per unit will be down. In an open competitive market without monopolies or price fixing cartels the price for high demand cheap basics gets driven down due to increased competition. For cheap basic good the main competitive strategy is to be cheaper than your rivals. It's the classic race to the bottom like we are seeing with low end electronics. The more the system fully automates and becomes hyper efficient the closer we move towards zero marginal cost.
marcosdumay 11y ago
> assuming they are producing with increasing marginal costs, which is generally true The norm is marginal production costs decreasing with scale. The usual exception to it is when those costs stay constant. Unitary costs increasing with scale isn't unheard of, but it's also not common in any way.
- foota 11y ago
  Up to a certain point, yes. But, in the short term, firms must increase their production by, say, hiring more workers. They might now have a less optimal worker/capital ratio which would increase their per unit costs. In the long run, their costs are flatter but still could eventually increase with quantity, imagine they're using all the resources locally available and have to start importing from somewhere else, that's going to increase costs.

by foota 11y ago

rorykoehler 11y ago

Everything will be automated. Cost per unit will be down. In an open competitive market without monopolies or price fixing cartels the price for high demand cheap basics gets driven down due to increased competition. For cheap basic good the main competitive strategy is to be cheaper than your rivals. It's the classic race to the bottom like we are seeing with low end electronics. The more the system fully automates and becomes hyper efficient the closer we move towards zero marginal cost.

marcosdumay 11y ago

> assuming they are producing with increasing marginal costs, which is generally true The norm is marginal production costs decreasing with scale. The usual exception to it is when those costs stay constant. Unitary costs increasing with scale isn't unheard of, but it's also not common in any way.

foota 11y ago
Up to a certain point, yes. But, in the short term, firms must increase their production by, say, hiring more workers. They might now have a less optimal worker/capital ratio which would increase their per unit costs. In the long run, their costs are flatter but still could eventually increase with quantity, imagine they're using all the resources locally available and have to start importing from somewhere else, that's going to increase costs.