Tuesday, December 21, 2010
At the Intersection of Supply and Demand...
Price is what we charge for goods and services...
Cost is what we pay.
Cost is a point on the demand curve. Price is a point on the supply curve. Where the two curves cross, cost and price are equal and a transaction may occur.
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4 comments:
When it comes to labor though, the cost to a business (salary) is also the source for another businesses prices.
If I fire you, another business is losing a paying customer. Not a problem in normal times. When everyone is firing, I just accelerate the race to the bottom...... not enough customers.
Hey come by this spot and give your thoughts on this post
http://crankyprofj.blogspot.com/2010/12/thought-experiment.html
This guy is a regular commenter at David Andolfattos blog. I hooked up with him earlier and prompted him to engage in this thought experiment.
When it comes to labor though, the cost to a business (salary) is also the source for another businesses prices.
The cost to a business (salary) is the price of labor. Two sides of one transaction.
Same money used in another transaction is the price another business charges, and the price I pay. Two sides of another transaction.
I just break it up different than you.
Hey, I took a quick look at the Cranky Professor's post. Your challenge reminds me of something.... :)
I'll get in on it over the holiday weekend.
Have a good Christmas, Greg. (Hope you're not working!)
Art
Thanks
Merry Christmas to you too.
I will be on call Saturday but its my first Christmas in a while and for a while.
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