[Homer Falcon]

Originally Posted by 19AL63

There has not been a president that has raised the debt in three years like Obama has and there is no sign of it slowing down. Give him five more years and lets see what the total is. In many things it is great to set records, sports, business profits, up swing of the stock market, etc. But setting a record for raising the national debt is not one of them.

True dat.

Macroeconomics have reached the point of diminishing returns.
It's not Keynesian if it's not self-sustaining. The 'rats never understood that, but the pubs have unfortunately forgotten it.

[DGUtley]

$3.99 yesterday in Akron.

[ragin_runner]

Originally Posted by bethere

of course they wouldn't be fixed costs, if in fact, they turned out to be variable costs, huh?



your local water service is a utility. in, ohio that means in most cases that PUCO would decide what the price is not the market or the local people. zimmer, for example, was supposed to be a nuclear plant. instead it was forced to become a coal fired plant. the consortium of utilities that built the place sought to pass those misguided costs on to the consumer and they never have been able to do so.

in any case you are talking apples to oranges, here.




again, utilities mostly don't determine their own prices. perhaps they did in your town, but generally they never do.



but mostly, yeah. ... and don't forget that i said, 'free market.'

The local utility has to request from he PUCO price changes and justify it based on a budget. That budget will show less income and the revenue not covering fixed costs. It's not apples and oranges if you read the example. The market id free. After many decade of squabbling , the citizens have the ability to purchase from the rural water association or from the larger city next to them. There's competition. It's a free market. after many, many decades the citizens finally had a choice.

Demand doesn't always force a price reduction. Fixed costs need to be covered and less volume will force a price increase. Your definitive statement that a price always reduces when demand drops just isn't true and that's the point of me providing an example.

[bethere]

Originally Posted by ragin_runner

The local utility has to request from he PUCO price changes and justify it based on a budget. That budget will show less income and the revenue not covering fixed costs. It's not apples and oranges if you read the example. The market id free. After many decade of squabbling , the citizens have the ability to purchase from the rural water association or from the larger city next to them. There's competition. It's a free market. after many, many decades the citizens finally had a choice.

Demand doesn't always force a price reduction. Fixed costs need to be covered and less volume will force a price increase. Your definitive statement that a price always reduces when demand drops just isn't true and that's the point of me providing an example.

as soon as your fixed costs make your unitary price uncompetitive you will be out of business--unless is is a monopoly situation or they are forced by law to buy from you. in either case that would not qualify as a free market experience.

a nice discussion, sir.

to push this a step further there is another factor here: good will.

good will is an abstract concept most of the time, but in accounting it often represents an actual dollar amount. ronald mcdonald, for example, is historically claimed on the balance sheet as a certain cash amount of goodwill for his corporation. this is a matter of Standard Accounting Procedure.

there could be SOME loyalty to your city, but that will only go so far. then when you become price uncompetitive by exceeding that (goodwill + prevailing market price) you will be out of business but you will know for sure the dollar amount that you should have been claiming on your balance sheet as good will for being progressive and maintaining your own water plant.

[ragin_runner]

Originally Posted by bethere

as soon as your fixed costs make your unitary price uncompetitive you will be out of business--unless is is a monopoly situation or they are forced by law to buy from you. in either case that would not qualify as a free market experience.

a nice discussion, sir.

to push this a step further there is another factor here: good will.

good will is an abstract concept most of the time, but in accounting it often represents an actual dollar amount. ronald mcdonald, for example, is historically claimed on the balance sheet as a certain cash amount of goodwill for his corporation. this is a matter of Standard Accounting Procedure.

there could be SOME loyalty to your city, but that will only go so far. then when you become price uncompetitive by exceeding that (goodwill + prevailing market price) you will be out of business but you will know for sure the dollar amount that you should have been claiming on your balance sheet as good will for being progressive and maintaining your own water plant.

Why would you assume in my explanation the price was uncompetitive? Maybe it was too low to begin with and after the volume reduced the fixed costs forced a rise in price making it more market level!

Competition existed with two entities and lowering demand forced a rise in prices.

[libbey1963]

http://www.youtube.com/watch_popup?v...rrBU&vg=medium

[bethere]

Originally Posted by ragin_runner

Why would you assume in my explanation the price was uncompetitive? Maybe it was too low to begin with and after the volume reduced the fixed costs forced a rise in price making it more market level!

Competition existed with two entities and lowering demand forced a rise in prices.

i didn't, did i? i said WHEN it becomes uncompetitive.

consider the elecric power sitution in ohio. there is competition but it isn't competitive... multiple players--even with institutionalized deregulation in place--don't guarantee competitive synergy.

again, a nice discussion. i humbly submit to you, as this is the second time we have had this discussion, that you would both benefit from and actually enjoy a quarter or two of economics.

[ragin_runner]

Originally Posted by bethere

i didn't, did i? i said WHEN it becomes uncompetitive.

[i]consider the elecric power sitution in ohio. there is competition but it isn't competitive... multiple players--even with institutionalized deregulation in place--don't guarantee competitive synergy.

I extend my apologies. You didn't but you did assume the fixed costs would force the price to be uncompetitive. There's no way to know that. They could have extremely low fixed costs...much lower than their competition.


The point is that I offered this as an example to a definitive statement that when demand drops prices drop. In general they do but there are exceptions.

[bethere]

Originally Posted by ragin_runner

I extend my apologies. You didn't but you did assume the fixed costs would force the price to be uncompetitive. There's no way to know that. They could have extremely low fixed costs...much lower than their competition.

The point is that I offered this as an example to a definitive statement that when demand drops prices drop. In general they do but there are exceptions.

you personally told me that the fixed costs were substantial enough to force you to go to PUCO, so i had good reason for thinking that. also consider that in any industry if i have fixed costs, and you are doing the same activity, you are pretty likely to have similar fixed costs therby making them basically irrelevant in any conversation on competitive pricing.

we've had this discussion before and we reached this same point. so i'll say it again:

go take some econ! i am not saying the derisively. you enjoy the topic and you have a good base understanding of some of the dynamics. a couple of courses would make you an expert on the subject compared to almost anyone you will ever meet, whether that is here or at work.

[ragin_runner]

Not true. You are making assumptions. The fixed costs take into account many different things. A rural water company has very different fixed costs than a small producer from the Lake. The rural water company is buying it from a much larger producer and has some ability to not carry the burden of certain epa activity requirements. The economies of scale impact comes into play also when purchasing from a large supplier and reselling the commodity.

The fixed costs were not equivalent.

When demand dropped the cash flow had to be increased. Even with the increase they remain competitive to this day with a similar per cubic feet charge as the rural supplier.

There's more to market prices in a competitive environment than pure supply and demand. It is not I that needs a the econ class my friend.

The point is that prices raised due to a decrease in demand.

[bethere]

Originally Posted by ragin_runner

Not true. You are making assumptions. The fixed costs take into account many different things. A rural water company has very different fixed costs than a small producer from the Lake. The rural water company is buying it from a much larger producer and has some ability to not carry the burden of certain epa activity requirements. The economies of scale impact comes into play also when purchasing from a large supplier and reselling the commodity.

The fixed costs were not equivalent.

When demand dropped the cash flow had to be increased. Even with the increase they remain competitive to this day with a similar per cubic feet charge as the rural supplier.

There's more to market prices in a competitive environment than pure supply and demand. It is not I that needs a the econ class my friend.
s
The point is that prices raised due to a decrease in demand.

all i have been saying is that when your fixed costs make your price uncompetitive you will be out of business. any number of factors can affect this in the short run. but as soon as you cannot operate where your marginal costs = marginal revenues i can assure you you will be out of business.

have a great day!

[ragin_runner]

Originally Posted by bethere

all i have been saying is that when your fixed costs make your price uncompetitive you will be out of business. any number of factors can affect this in the short run. but as soon as you cannot operate where your marginal costs = marginal revenues i can assure you you will be out of business.

have a great day!

Thanks!

All I have said was that lower demand doesn't always equate to lower prices and the gave an example.

By the way, in my example fixed costs didn't make the price uncompetitive.

[bethere]

Originally Posted by ragin_runner

Thanks!

All I have said was that lower demand doesn't always equate to lower prices and the gave an example.

By the way, in my example fixed costs didn't make the price uncompetitive.

STILL YOU FORGET GOODWILL. GOODWILL + THE PREVAILING MARKET PRICE? WHEN YOU EXCEED THAT YOU ARE DONE.

and that is all i have been saying.

[ragin_runner]

Originally Posted by bethere

STILL YOU FORGET GOODWILL. GOODWILL + THE PREVAILING MARKET PRICE? WHEN YOU EXCEED THAT YOU ARE DONE.

and that is all i have been saying.

I haven't forgotten it at all.

The cost plus all other factors and influences even after the rise still had a price at or below market. There was no reason for them to be done.

Thye continued to be competitive with the product and price.