Skip to main content

Different Prices for the Same Thing

Physically identical things are often sold for different prices, usually because of accompanying conditions that are quite different. If a camera store sells a particular make and model of camera for $300 and the discount house sells it for $280, it may still pay to go to the camera store where another make and model of camera is available for $250 that does what you want to do just as well or better. If the camera store’s larger selection and more knowledgeable sales staff enables you to buy only what meets your own needs, there may be financial savings there, as well as better advice on operating the camera, even if the discount house charges a lower price for each particular camera that both stores carry. The point here is not to claim that it is generally better or generally worse to buy cameras at a camera store or at a discount house. Instead, the point is that what is being sold in the two places is not the same, even when the cameras themselves are physically identical. The stores are charging different prices because they are supplying different things that have different costs to the seller, as well as to the buyer.
Labels:

Comments

Post a Comment

Popular posts from this blog

Inventories Definition

Inventory is a substitute for knowledge. Since you don’t always know just how much inventory you are actually going to need and since inventory costs money, a business enterprise must try to limit how much inventory it has on hand. Those businesses, which have the greatest amount of knowledge and come closest to the optimal size of inventory, will have their profit prospects enhanced. Just as prices in general affect the allocation of resources from one place to another at a given time, so returns on investment affect the allocation of resources from one time period to another. A high rate of return provides incentives for people to save and invest more than they would at a lower rate of return. – A higher rate of return encourages people to consume less in the present so that they may consume more in the future. It allocates resources over time. The present value of an asset is in fact nothing more than its anticipated future returns, added up and discounted for the fac...
Post a Comment
Read more

Efficiency and Its Implications

Production costs are reduced when the fixed overhead costs can be spread out over a large volume of output, adding little to the cost of each individual item. Scheduling also affects production costs. When a high-volume retailer signs a contract for a large order from a given manufacturer, that manufacturer can then schedule the work evenly throughout the year. This avoids the additional costs that go with ups and downs in the orders that come in unpredictably from the market, leaving the manufacturer’s workforce idle during some weeks. The fact that profits are contingent upon efficiency in producing what your customers want, at a price that customers are willing to pay – and that losses are an ever present threat if a business fails to provide that – explains much of the economic prosperity found in economics that operate under free market competition. Profits as a realized end-result are crucial to the individual business, but it is the Prospect of Profits – and the threat of loss...
Post a Comment
Read more

Winners & Losers

Whatever the merits or demerits of various political proposal, what must be kept in mind when evaluating them is that the good fortunes and misfortunes of different sectors of the economy may be closely related as cause and effect - and that preventing bad effects may prevent good effects. It was not accidental that Smith Corona was losing millions of dollars on its typewriters while Dell was making millions on its computers. It was not accidental that Safeway surged to the top of the grocery business while A&P fell from its peak to virtual oblivion. The efficient allocation of scarce resources, which have alternative uses, means that some must lose their ability to use those resources in order that others can gain the ability to use them Typewriters were no longer what the public wanted after they had the option to achieve the same end result and more with computers. Scarcity implies that resources must be taken from some places, in order to go to other places.
Post a Comment
Read more