Celejar writes: > Doesn't basic economics dictate that given competition, the equilibrium > price is determined by both supply and demand? Even if I'm willing to pay > a great deal, if the cost to produce the item is low, competition should > drive down the price.
People who buy cheap white bread buy cheap white bread. They just want something to stuff in the kids' mouths. Price is almost all that matters. People who buy whole wheat bread are picky. They want bread that they believe fits their notions about nutrition and are influenced by what their friends say and by the labeling and advertising. Price is far from their sole criteria: some will deliberately avoid the cheapest brand because they believe that it must be inferior. Some will buy the most expensive brand because "you get what you pay for" or just so they can brag. > Are you implying that the market is a monopoly or oligarchy? No. The generic white bread market and the whole-wheat bread market are two different markets with different elasticities. This results in different equilibrium prices even with identical costs (which they probably aren't). This is basic economics. Did you not study it at university? -- John Hasler -- To UNSUBSCRIBE, email to [EMAIL PROTECTED] with a subject of "unsubscribe". Trouble? Contact [EMAIL PROTECTED]
