You know what I appreciate much about this channel? The essence of it's lessons works no matter where you from. See, I am from Brazil and the market logic explained by this topic happens here too. So, if you don't mind, I took the liberty to bring data from my country, where coffee is a very consumed drink by people (similar to US). I'm not the type to bring various numbers or statistics. I read and understand a lot of stuff, then produce a report. Expecting to achive the task though. Here it goes. From 2017 to 2020, we had some fluctuations on coffee price due fallings and rises regarding international market, considering that Brazil is the biggest exporter of coffee in the world. In that period, the internal market had increased the consumption a little, not affecting the general coffee price too much. We had a notable price rising in 2020 to 2022 regarding the increased consumption caused by the pandemic and a low harvest of the period. Today, a kg of coffee is around R$ 34, which is 39% higher than the price in 2017. The reason for that rise, among others, seems to be that people lost some control over the consumption of food, including coffee, when under the quarentee. I checked some places to buy coffee and noticed some variations in the prices. Indeed, like pointed by the topic, the variation has to do with the demands of the different locations, allowing the owners some space to choose the sales strategy, which also contributes to a better competition. However, other substantial factors, out of the control of the stablishment owners or the producers, makes the prices go higher, like the rent of the place, which follows a real estate market, and fees the stablishment have to pay to operate in certain areas. This has to do with regulations that does not always acompany the market logic of the topic. I could paste all the reference links related to the informations I gathered here but it does not seen to be necessary due the nature of this commentary section. Thanks for reading. Made with care.
There's another phenomenon where the demand goes up as the price goes up, which can happen sometimes with high-end merchandise. A person who wants to buy diamond jewelry or a rare painting isn't going to waste their time with anything their peers see as cheap. Instead, they'll want to buy the most expensive items for the sake of bragging rights.
Right! I had this argument with my econ teacher because while in class I also opened a luxury boutique and it seems my customers would buy more if the price was going up… but yes, there are limits
First rate. Well done! When will 'Sprouts' take a look at The Whorfian Hypothesis' In our day of convoluted economics and politics a look at one of the ways language may be used to manipulate would be a resource for my English Dept. and anyone with a curious mind. Thanks
that is of course, counting that the coffee shop owner is willing to pay right below minimum wage to his employees, pockets 300% of the profits in ‘bonuses’, and rants angrily on facebook about young people ‘not wanting to work’
@@mrroger-t6m Heheheheh. If he made 1$ in profit from each cup, then pocketed 3$ in profit from each cup, he'd probably be getting government kickbacks or have some kind of shady deals going on heheheheh.
There are a number of problems with this scenario, primarily with not stating the assumptions and simplifications or the evidence and real-world scenarios to back up this theoretical model. Whilst it is true that supply, demand and price are all interconnected, it is a gross simplification to assume it falls an immutable law or trend that can be predictable. In reality markets are not efficient, advertising & branding is enormously influential and monopolies can easily bend or break these rules in a real-life scenario. The first statement makes a hash of the concept of scarcity. There are not "unlimited" human wants, unless you are assuming all humans are endlessly greedy. But it is true there is a limited supply and the price mechanism can work as a means of balancing human wants with limited stuff. But more importantly, the goal of suppliers or sellers in a market is to get the highest price possible, to make the most profit possible. Whilst buyers, generally speaking, want to spend the lowest amount possible. A market is simply a set of rules and regulations that determines how these two parties of buyers and sellers, replicated over and over in different areas of the economy, interact and do business. Often however it is that there are not many small buyers and sellers, even 100:1 but infact 1000:1 or even 1000000:1. A few big sellers dominate a marketplace. This illustrates the problem that markets tend towards consolidation, which ultimately renders them inefficient and rent-seeking. Particularly for products that are seen as a daily necessity, as coffee is in the US and tea is in the UK, as well as real necessities like heat, electricity, water a market actor, middleman or seller will try and place themselves in the middle of said transaction and rig the market. This can be done through a variety of measures and was a foundation of the Gilded Age that led to the agrarian populism of the 1870s in the USA and progressive reform leading to the New Deal. Basically, whilst most coffee sellers and producers may be reasonable, conscientious and want a decent price for their customers, in a 'free' (or should I say 'laissez-faire') marketplace, the most ruthless and profit-oriented actor will try and obtain controlling market share. See Amazon with books or Starbucks with coffee. They will then raise the price in the absence of competition, squeezing the wages of workers and gouging their customers in order to make huge profits, which are paid out in executive bonuses and share dividends (mostly held by a tiny proportion of the population, or indeed foreign investors. Often these big sellers do so by using their size to gain an unfair advantage, paying little tax or relying on external capital that competitors don't have access to to keep prices artificially low and bankrupt opponents. However, in a robust, well-regulated market with aggressive antitrust enforcement to protect smaller sellers and strong labour unions, companies have to find ways to produce higher profits without rent-seeking. This leads to investment in productivity improvements, basically making more with less, or the same amount in less time. So if you could harvest coffee more quickly with mechanised machinery or indeed have a more robust crop, less likely to go fallow with poor weather or the plant is transported by ship rather than by air. This is not to mention the enormous value and influence of brands, from Starbucks Coffee to Campbell soups, people tend to by almost exclusively from a name they trust. This has been true since the invention of the self-service supermarket.
Awesome video! Another point with the 'price control' idea is that 'rent control' makes housing unaffordable. Capitalism is rough, but every other system is infinitely worse.
I know this is just a generic economics one - and a good one - about RL coffeshops though... I buy roasted coffee beans I grind at home. Plenty of competition there, even the grocery stores compete with luxury suppliers. I used to like coffeshops to sit and read and check my notes - but they are "Come in buy something get out" and the "Baristas" make you wait 20 minutes while they talk with friends in line for deep personal conversations, you count yourself lucky if it doesn't have 1/2 spit content and then if you sit and read or go over notes like a legit Bohemian they keep randomly hitting the "Grind" buttons to annoy and distract you. And no I've never harassed, pestered, etc. and come in nicely dressed and even TIP them, often the only person to do so. Guess its funny when you are white and male to put you down, the only thing they learned in the Debt Factory aka modern college. It's proven because the major chain does NOT use a Mermaid but rather a different aquatic monster of legend but all the "Liberal arts majors" learned after 8 years is to whine about boobs not the symbolism being exactly with how predatory the corporation is.
No, my friend, then you got to study behavioral economics to understand that people are not driven by rationality but with a bunch of systematic mistakes called biases, then it will make sense again, and you will realize that we are not intelligent as much as we think 😊
