Again, this applies to commodities, not to other goods. Commodities do tend to have the same price for everyone. If I'm dying of thirst in the city and go to the supermarket, I'll buy a water bottle for the same cost as the person who has already drunk 3L in the day. For commodities, market value is equal to real value (for the most part). This isn't necessarily the case for other goods - and the farther away they are from commodity status, the least this is likely to be the case.Yeah, and that's what makes prices stable over time also, what you didn't mention. — Posty McPostface
If we have a supply shortage of water, prices will go up. But over time they will come back down. What determines the level they climb to, and the level they go back to over time? I'd say the level they go up to is determined by the market. The level they go back down to is the real value (which the market approximates in the long run). — Agustino
I would enlarge that to other social sciences as well.Really, I think economics is the field most in need of a revolution at the moment. People are stuck in absurd ways of thinking, that literarily don't have much to do with reality anymore. — Agustino
The issue is that for non-commodities real value is often not the same as market value. So how can we scientifically calculate this real value? For example, someone is saying that XYZ stock is undervalued. To say it's undervalued means that the market price isn't the same as the real price, and the real price is actually greater. In the long run, the market will approximate the real price. So you ought to buy the stock. Right?Yeah but your only talking about supply and demand. I really don't get what's the issue. Maybe you would prefer a econometric explanation but I can't help with that. — Posty McPostface
So why is it possible to sell one website for $200 to a client, and another for $10,000, even though the same work goes in both, and they are essentially the same good? Why the price difference? The market doesn't have a single equilibrium or what?Umm, service goods or products offered obey the same relationship a commodity good does based on supply and demand. There should be no confusion with that. — Posty McPostface
So why is it possible to sell one website for $200 to a client, and another for $10,000, even though the same work goes in both, and they are essentially the same good? Why the price difference? The market doesn't have a single equilibrium or what? — Agustino
And what determines what the customer is willing to pay?Depends on many factors. How much you customer is willing to pay above market price and why would they do that, how your product or in this case service differs from the rest of the competition, reputation, etc. Too many to list but you get the idea, no? — Posty McPostface
And what determines what the customer is willing to pay? — Agustino
It can't be supply and demand when the same good gets sold at about the same time to two different clients at wildly different price points. Supply and demand gives only one equilibrium.Supply and demand. — Posty McPostface
Yeah that's what I meant to tell you. So this is another way in which some markets can operate, with transactions happening all over the actual demand curve. If the products sold are unique and there exists high differentiation amongst the participants along with the possibility of market segmentation this can end up happening. Market segmentation is possible because, for example, one of your clients does not know how much you charge the other.But, you seem to have a very special product or service if you can charge 10000 to one company or individual and at the same time charge 1000 to another company or individual. I'm afraid we're in the twilight zone — Posty McPostface
It can't be supply and demand when the same good gets sold at about the same time to two different clients at wildly different price points. — Agustino
Why is it better? It's as good technically and in all other ways as the other one. The only difference is that they will be advertising to different groups of people. And of course they'll have different designs, since, well, they are different websites. And possibly slightly different functionality too.website for the rich firm is a 'better' website — Inter Alia
Psychologically speaking, if my company is selling $1,000,000/product through that website, I will want that website to be good. I'm not a web developer or a web expert though. But I will be okay paying what is still relatively little to me in order to ensure that it's as good as it can be. Paying $200 for it would be disgusting - I will feel like I'm getting a bad deal, and would much rather have the certainty of paying more to ensure good work. Relatively low prices are always associated with bad quality.the point is if it isn't better that the coffee shop version at £5 (English keyboard so I've changed your prices), then what's to stop your competitors from pricing their website to the oil tank firm at £5? What firm would pay you £100 rather than pay your competitors £5,youd very soon be out of business, surely? — Inter Alia
The "good" and "bad" are psychological associations made based on price. The $200 one may be as good as the $10,000 one in reality.Again, you're talking about 'good' and 'bad' quality work now — Inter Alia
No, I'd just agree to charge his whole wealth and split it with the other water salesman. Why fight, when we can cooperate and make the most?You can only do what you say if you have a monopoly or market fixing agreement. If there was another water salesman in the same desert he'd get the billionaire's money by charging less than you. You'd then respond by offering less than him, this would carry on until the supply value of the water was reached (which no one would charges less than otherwise they'd make a loss). — Inter Alia
Yes and no. It's also relative to what you perceive your own worth to be.That 'feeling' can only be established relative to a competitors product. — Posty McPostface
He doesn't have to, it's just basic psychology.Warranted the person is an idiot. — Posty McPostface
>:OYeah, rational agents aren't all that rational. Too bad, or good, depending on whether your a consumer or producer. — Posty McPostface
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