There was another thread recently about what happened in your life that made you no longer feel like a child. I think for me one of those things was realizing that the price of things has very little to do at all with the cost of creating that thing.
This is actually the reason why taxes don’t increase luxury item costs as the cost is set to the market demand rather than from supply. In fact, the benefits from taxes help people afford more products in a virtuous cycle. It’s also the reason tariffs or taxes on raw goods are so bad as you actually are creating dead weight loss and driving down demand which can be useful or detrimental depending on why someone needs that product.
There was another thread recently about what happened in your life that made you no longer feel like a child. I think for me one of those things was realizing that the price of things has very little to do at all with the cost of creating that thing.
This is actually the reason why taxes don’t increase luxury item costs as the cost is set to the market demand rather than from supply. In fact, the benefits from taxes help people afford more products in a virtuous cycle. It’s also the reason tariffs or taxes on raw goods are so bad as you actually are creating dead weight loss and driving down demand which can be useful or detrimental depending on why someone needs that product.
Price = Cost of Materials + (Middle Man + Middle Man + Middle Man + Middle Man + Middle Man + Middle Man) + Cost of Labor.
It’s Econ 101
Price is whichever is greater: what they think the highest cost*adoption will be or the minimum people will do it for.