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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: arun gera who wrote (79605)	9/14/2011 3:24:47 PM
From: Maurice Winn	Read Replies (1) \| Respond to of 218870

Arun, it strains credulity to think you don't know the difference, but I can't see the punchline, so I'll explain. People, when they buy something, are seeking value. They pay what something is worth to them or whatever competitors are offering which might be cheaper. <Is that why illegal drugs sell for so much more than cost to produce? Is that why tickets to popular sports events sell at double the normal price when purchased from scalpers, stubhub etc.? > Always, people pay less than the absolute maximum something is worth to them and the difference is called [in economic jargon] the consumer surplus. The cost to produce something has nothing to do with what people will pay for something. What determines how much they will pay more than the cost of production is the competition among suppliers. The cost to produce something is merely the absolute minimum that something will cost or, of course, the producers will not produce those things. Illegal drugs cost not much to produce in bulk in Afghanistan or Colombia, but to that cost of production you have to add all the costs on the way to the customer. For example there is the cost of being shot by competing drug runners, police or being put in prison for a decade or two. Plus the cost of standing around on a street corner hoping a customer will show up. When I used to sell oil, I didn't add much to my salary requirements because I might be put in gaol for a decade for doing so. The price of oil to my customers was therefore lower than if competing oil company people were trying to shoot me or police were hunting me down day and night. Regarding tickets to sports events, that's supply and demand in balance. Of course if somebody sells something for less than it's worth, crowds will clamour for tickets. And they will buy cheap and sell dear if they can get cheap ones they don't want. Supply and demand applies to Tradable Citizenship too. If a country offers far fewer citizenships than would sell at a lower price, those who really really want to live there will bid higher prices to get hold of one. Those being recycled will also sell at higher prices. Prospective citizens will evaluate the country and decide what it's worth to them. A country would not be so stupid as to sell citizenships at a lower price than the market would bear. That would result in scalpers buying them and passing them on at the right price. A country worth having a citizenship in would sell them at auction to the highest bidder. Arun, it's difficult to believe you don't understand pricing at such a basic level, but there you are. Now you know. Mqurice