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(USA Today)   URGENT ECONOMICS BREAKTHROUGH: when you raise the price of things, you sell less of those things   (usatoday.com) divider line 82
    More: Obvious, soda taxes, American Beverage Association, soft drinks  
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3481 clicks; posted to Business » on 15 Nov 2013 at 2:43 PM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2013-11-15 12:37:00 PM  
well, in this case it does. Not all goods work that way subby.
 
2013-11-15 12:40:12 PM  
Apple has been bucking this trend for years...
 
2013-11-15 12:45:15 PM  

tobcc: Apple has been bucking this trend for years...


exactly. By marketing their products as premium and exclusive they actually sell more at the higher price point than if their products were cheaper.
 
2013-11-15 12:47:40 PM  
Actually, that depends on the elasticity of demand. A good with an inelastic demand curve will sell the same regardless of price.
 
wee
2013-11-15 12:55:15 PM  
Kinda depends on demand, subby.
 
2013-11-15 01:07:12 PM  
Fewer, Subby, not "less."  English, motherfarker, do you speak it?
 
2013-11-15 01:48:14 PM  
or fewer, if you speak english.
 
2013-11-15 02:10:38 PM  
Shouldn't it be "fewer" and not "less"?
 
2013-11-15 02:22:58 PM  
Which is why we all suck at the Wal-Mart teat. You want to know who to blame for jobs going overseas? Look in the mirror.
 
2013-11-15 02:29:56 PM  

RexTalionis: Actually, that depends on the elasticity of demand. A good with an inelastic demand curve will sell the same regardless of price.


Good work, Mr. Bell.
 
2013-11-15 02:30:38 PM  

RexTalionis: Actually, that depends on the elasticity of demand. A good with an inelastic demand curve will sell the same regardless of price.


worse, this study isnt even close to useful
1) raise the price in one location and people will buy the same product elsewhere
2) but leave some of the products at the lower price, shocking news, bet the sales of the lower priced items went up
3) the study also ignores decades of price elasticity and price point studies

/shudder - FFS, I have one expertise in the real world, 25 years of pricing models, this study doesnt even come close to answering the question that they claim that they are trying to answer
 
2013-11-15 02:38:43 PM  
Economic Supply/Demand curve is not always true. The true answer is: "It Depends"

Sugary soda is not chemotherapy, (yet).
 
2013-11-15 02:45:07 PM  
I just wanted to come in here and pile on subby.
 
2013-11-15 02:48:01 PM  
economics is like wierd, man
 
2013-11-15 02:48:57 PM  

tobcc: Apple has been bucking this trend for years...



that is easy to do with so many living off of rising stockprices as jobs go overseas for cheap commie chinese labor.
 
2013-11-15 02:49:51 PM  
Is it just me, or did they neglect to study the effect of this pricing on consumption of diet versions of those products?
 
2013-11-15 02:50:37 PM  

Voiceofreason01: tobcc: Apple has been bucking this trend for years...

exactly. By marketing their products as premium and exclusive they actually sell more at the higher price point than if their products were cheaper.


yea, and the less expensive (and superior) Open Source OS Android ships on 81% of smartphones around the world.

you are a genius!!
 
2013-11-15 02:52:05 PM  
Now apply this to tax rates and see what happens.
 
2013-11-15 02:52:05 PM  

R.A.Danny: Which is why we all suck at the Wal-Mart teat. You want to know who to blame for jobs going overseas? Look in the mirror.



its MaoMart now.

"We exploit cheap, communist, chinese labor so you don't have to!"
 
2013-11-15 02:57:34 PM  

Linux_Yes: economics is like wierd, man


Considering that economics is really about measuring the behavior of human beings, and that human beings are weird - well, I think you get where I'm going with this...
 
2013-11-15 02:58:56 PM  

Smeggy Smurf: Now apply this to tax rates and see what happens.


That depends on what the taxes pay for.

If they pay for roads and infrastructure plus enforce regulation and market systems in such a way that they engender trust in the consumer than sometimes higher taxes are better.  This as opposed to no taxes where there is no maintained infrastructure. (see Somalia as an example of the no tax approach) or Denmark or another Scandinavian country for the higher tax approach.
 
2013-11-15 03:03:55 PM  

mrlewish: Smeggy Smurf: Now apply this to tax rates and see what happens.

That depends on what the taxes pay for.

If they pay for roads and infrastructure plus enforce regulation and market systems in such a way that they engender trust in the consumer than sometimes higher taxes are better.  This as opposed to no taxes where there is no maintained infrastructure. (see Somalia as an example of the no tax approach) or Denmark or another Scandinavian country for the higher tax approach.


He may have been referencing the Laffer curve.
 
2013-11-15 03:04:36 PM  

Smeggy Smurf: Now apply this to tax rates and see what happens.


Since your statement effectively argues for the infinite progression of a perceived trend (which was inaccurately posed in the first place), I assume you think that a 0% tax rate will result in the highest possible revenue?

mlkshk.com
 
2013-11-15 03:07:12 PM  

skozlaw: I assume you think that a 0% tax rate will result in the highest possible revenue?


Well, no taxation might result in the highest possible revenue for a business... but not tax revenue.
 
2013-11-15 03:08:58 PM  
Ehh,

You guys are being too literal.  Sure you sell MORE or the same of some goods as price increases, but for the other 99% of things you will sell less as price increases.

This is the equivalent of somebody saying that water turns into a solid at 32 degrees F and somebody piping in that this isn't true because ice can sometimes exist at super high pressures but low temperatures or something.

If anything subby is guilty of discounting the benefit of quantifying the amount of sales decrease due to a price increase.
 
2013-11-15 03:11:02 PM  
PSA:

I buy pop in the 2 liter bottles... they don't stay open long enough to lose fizz, and price/oz is much better than canned or smaller bottles. I usually pay $1 or less per 2 liter for name brand products, which equates to $2.12 per 12-pack.

Lots of people don't realize the savings, so I just thought I'd mention it.

Seems like I've been paying the same price for pop for over 20 years.
 
2013-11-15 03:11:27 PM  

nocturnal001: Ehh,

You guys are being too literal.  Sure you sell MORE or the same of some goods as price increases, but for the other 99% of things you will sell less as price increases.

This is the equivalent of somebody saying that water turns into a solid at 32 degrees F and somebody piping in that this isn't true because ice can sometimes exist at super high pressures but low temperatures or something.

If anything subby is guilty of discounting the benefit of quantifying the amount of sales decrease due to a price increase.



*sure you could sell MORE* is what I meant to type
 
2013-11-15 03:12:45 PM  

nocturnal001: This is the equivalent of somebody saying that water turns into a solid at 32 degrees F and somebody piping in that this isn't true because ice can sometimes exist at super high pressures but low temperatures or something.


Not exactly, I'd say this is more like saying "if it gets below 32 degrees F liquids freeze"... it's true for *some* liquids. The headline totally discounts pricing models and a host of other factors.
 
2013-11-15 03:16:24 PM  
Profit maximization!
 
2013-11-15 03:20:16 PM  

Treygreen13: Not exactly, I'd say this is more like saying "if it gets below 32 degrees F liquids freeze"... it's true for *some* liquids. The headline totally discounts pricing models and a host of other factors.


Subby.

No. No, I did not include pricing models and elasticity of demand and whatever the fark in the headline. That is because the headline is supposed to be funny and all that shiat would belabor the point.
 
2013-11-15 03:22:04 PM  

Treygreen13: nocturnal001: This is the equivalent of somebody saying that water turns into a solid at 32 degrees F and somebody piping in that this isn't true because ice can sometimes exist at super high pressures but low temperatures or something.

Not exactly, I'd say this is more like saying "if it gets below 32 degrees F liquids freeze"... it's true for *some* liquids. The headline totally discounts pricing models and a host of other factors.


Of all the liquids possible what percentage freeze below 32?

Now, of all the products/services in the world how many are normal goods that don't have some amount of price elasticity?  They are called normal goods for a reason ;)
 
2013-11-15 03:22:49 PM  

Gosling: Treygreen13: Not exactly, I'd say this is more like saying "if it gets below 32 degrees F liquids freeze"... it's true for *some* liquids. The headline totally discounts pricing models and a host of other factors.

Subby.

No. No, I did not include pricing models and elasticity of demand and whatever the fark in the headline. That is because the headline is supposed to be funny and all that shiat would belabor the point.


Well then carry on.
 
2013-11-15 03:22:56 PM  
Here's the bottom line: stuff goes up, I buy less or steal it. Clear? Great.
 
2013-11-15 03:26:16 PM  

nocturnal001: Of all the liquids possible what percentage freeze below 32?


Of *all* the possible liquids? Hell, I don't know. Google it, I guess.

nocturnal001: Now, of all the products/services in the world how many are normal goods that don't have some amount of price elasticity?  They are called normal goods for a reason ;)


planetblade.com
 
2013-11-15 03:42:02 PM  
Not always true, and can be the opposite: see Veblen good  Some luxury items become more desirable the more expensive they get- Rolexes, Bentleys, etc

This happens with college tuition a lot.  There have been schools that have cut their prices in order to undercut their competition and watched their applicant pools fall.  After all, who wants to go to a cut rate school?  If it's cheap it can't be very good- you should pick the more expensive option.
 
2013-11-15 03:43:36 PM  
True but if I had two coconuts and you had three.......
 
2013-11-15 03:53:03 PM  

LesserEvil: PSA:

I buy pop in the 2 liter bottles... they don't stay open long enough to lose fizz, and price/oz is much better than canned or smaller bottles. I usually pay $1 or less per 2 liter for name brand products, which equates to $2.12 per 12-pack.

Lots of people don't realize the savings, so I just thought I'd mention it.

Seems like I've been paying the same price for pop for over 20 years.



I have solved this problem, thanks to a little product called soda stream. btw their caloric count for the regular flavors is less than the pre-bottled kind.
 
2013-11-15 03:54:39 PM  
I don't understand the obvious tag.
The study wasn't done to see whether or not the demand curve was downward sloping. The study was done to measure the slope. Furthermore, since the major goal of the price increase is (supposedly) to decrease demand, other methods of decreasing demand were compared with the price increase. These sorts of things help inform policy decisions. It's nice to know what to expect when you pass a law, and it's nice to know what options you have to reach a goal.
 
2013-11-15 04:03:23 PM  

KingVJ: LesserEvil: PSA:

I buy pop in the 2 liter bottles... they don't stay open long enough to lose fizz, and price/oz is much better than canned or smaller bottles. I usually pay $1 or less per 2 liter for name brand products, which equates to $2.12 per 12-pack.

Lots of people don't realize the savings, so I just thought I'd mention it.

Seems like I've been paying the same price for pop for over 20 years.


I have solved this problem, thanks to a little product called soda stream. btw their caloric count for the regular flavors is less than the pre-bottled kind.


I did the math on that... it's still cheaper to buy 2 liters, after buying the syrup, bottles, gas... and I've heard very mixed reviews about the taste - but some people seem to really like it.
 
2013-11-15 04:06:46 PM  
Guys...it's friggin' flavored water.
Not Champagne
 
2013-11-15 04:11:05 PM  

Smeggy Smurf: Now apply this to tax rates and see what happens.


Absolutely correct! If you assume no transactional costs to moving between tax jurisdictions, and no changes to benefits paid by those same tax dollars.
 
2013-11-15 04:37:00 PM  
Not if you're Gwynneth Paltrow.
 
2013-11-15 04:41:44 PM  

LesserEvil: PSA:

I buy pop in the 2 liter bottles... they don't stay open long enough to lose fizz, and price/oz is much better than canned or smaller bottles. I usually pay $1 or less per 2 liter for name brand products, which equates to $2.12 per 12-pack.

Lots of people don't realize the savings, so I just thought I'd mention it.

Seems like I've been paying the same price for pop for over 20 years.


Yeah, but buying cans saves me the hassle of washing glasses.  That's worth a few cents per serving in my (lazy) opinion.
 
2013-11-15 04:49:28 PM  

LesserEvil: PSA:

I buy pop in the 2 liter bottles... they don't stay open long enough to lose fizz, and price/oz is much better than canned or smaller bottles. I usually pay $1 or less per 2 liter for name brand products, which equates to $2.12 per 12-pack.

Lots of people don't realize the savings, so I just thought I'd mention it.

Seems like I've been paying the same price for pop for over 20 years.


Yeah 2-L are cheaper, but I disagree with your "doesn't stay open long enough to lose fizz" statement. It doesn't matter how little you have the bottle open, as soon as you poor out a glass you are increasing the open space in the bottle, doing so allows for less pressure and therefore less carbonation retention. If it's over a day since it's been open it's going to taste different.

KingVJ:

I have solved this problem, thanks to a little product called soda stream. btw their caloric count for the regular flavors is less than the pre-bottled kind.

I checked out soda stream, the reason that its lower calories is because they use artificial sweeteners, something I've never been able to stomach the taste of. I know you can get regular syrups and make your own, but it's a pretty big investment just to drink a pop. Also I can't imagine those tiny little CO2 cartridges could do many drinks, maybe if they had an adapter for one of the large paintball CO2 canisters I'd consider it.
 
2013-11-15 04:51:04 PM  

Geotpf: LesserEvil: PSA:

I buy pop in the 2 liter bottles... they don't stay open long enough to lose fizz, and price/oz is much better than canned or smaller bottles. I usually pay $1 or less per 2 liter for name brand products, which equates to $2.12 per 12-pack.

Lots of people don't realize the savings, so I just thought I'd mention it.

Seems like I've been paying the same price for pop for over 20 years.

Yeah, but buying cans saves me the hassle of washing glasses.  That's worth a few cents per serving in my (lazy) opinion.


Heh... I keep my "pop drinking glass" here on my computer desk for about a week. It's not like soda goes sour. I have a 13 year old son to do the dishes anyway.
 
2013-11-15 04:58:42 PM  
If the drop in sales is small enough, the extra revenue from the higher prices can overcome it.

100 widgets at 20 bucks = 2000 bucks
85 widgets at 25 bucks = 2125 bucks

But then you have to figure in if you can make 100 widgets for a cheaper price per widget than 85 widgets etc. etc.

/it's complicated
 
2013-11-15 05:00:28 PM  

Voiceofreason01: well, in this case it does. Not all goods work that way subby.


True, but Giffen goods are fairly uncommon.
 
2013-11-15 05:03:57 PM  
I had no idea Econ 101 questions were such good indicators of education level. . .
 
2013-11-15 05:08:34 PM  
blah blah blah snob goods blah blah
 
2013-11-15 05:10:23 PM  

Peki: I had no idea Econ 101 questions were such good indicators of education level. . .


These are macro questions.  The micro questions are harder.
 
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