One chart shows the employment impact of Seattle minimum wage increase

[Nice Squirrel]

Marketing strategies for a product not equal microeconomics.

Then these microeconomics do not match what happens in the marketplace and thus does not describe reality. (We'll call it faith-based economics.)

If they charge $1000 per bag they will sell as many as if they charge $.02?

Why stop at a thousand? Why not go full absurd? $10 x 10^∞∞∞

 

[laughing dog]

basic economics that "when something costs more people use less of it"

Yes, this is a really dumb argument, but typical for someone who never got beyond "basic economics".

It is true that it is basic economics. But for some reason, some people think that "basic economics" = "universal truth". No competent and honest economist (or person with graduate economics courses) would make such a foolish conflation.

As a general rule, when the cost of X rises, people will wish to use less of X when all other influences on their use of X do not change. However, general rules are not expected to be valid all the time. Nor is it clear in this case that all the other influences on the demand for labor are constant.

 

[ksen]

I took graduate school economics and they never reversed that whole "when something costs more people use less of it" rule.

I've priced products for retail sales (some limited wholesale) and have been in marketing a good chunk of my life and would like to know how you would like to explain value-based pricing and premium pricing (as well at these other pricing strategies) and why it is not only widely used but breaks the above rule. Please explain this phenomenon and remember to resolve the paradox that higher cost will always result in lower sales except when it clearly doesn't.

Marketing strategies for a product not equal microeconomics.

How is marketing strategies NOT part of microeconomics?

https://en.wikipedia.org/wiki/Microeconomics

Microeconomics (from Greek prefix mikro- meaning "small") is a branch of economics that studies the behavior of individuals and firms in making decisions regarding the allocation of limited resources.[1] Typically, it applies to markets where goods or services are bought and sold. Microeconomics examines how these decisions and behaviors affect the supply and demand for goods and services, which determines prices, and how prices, in turn, determine the quantity supplied and quantity demanded of goods and services.[2][3]

http://www.investopedia.com/university/microeconomics/microeconomics3.asp

So every significant development in the study of consumer decision-making, and every aspect of the process are of great interest to the businesses community. The data and insights provided by this microeconomic research are studied by marketers and frequently employed in a firm's pricing, marketing strategies, advertising, packaging, product research and development, quality and quantity considerations, and in other factors designed to stimulate sales.

I would be happy to help you fill out any of those forms you need to get that refund on your graduate level economics classes.

 

[dismal]

Then these microeconomics do not match what happens in the marketplace and thus does not describe reality. (We'll call it faith-based economics.)

Microeconomics does not attempt to describe everything that happens in the market place.

For example, if the questions is "All other things being equal, will I sell more bags of peanut m&ms at $12.00 or $2.00?" microeconomics has answers. It deals with the relationship between price and quantity demanded.

However, microeconomics does not attempt to answer questions like "How much will the sales off peanut m&ms increase if I hire Bill Cosby as a spokesman and flood the market with clever commercials showing him dropping peanut m&m's into people's drinks"? or "Does my ass look big in these pants?"

If they charge $1000 per bag they will sell as many as if they charge $.02?

Why stop at a thousand? Why not go full absurd? $10 x 10^∞∞∞

Indeed, why not? Perhaps we should ask ourselves why, if price has no effect on the quantity demanded, a kid hasn't opened up a lemonade stand charging $10 x 10^∞∞∞ per glass and walked away with all the oney in the world.

- - - Updated - - -

I took graduate school economics and they never reversed that whole "when something costs more people use less of it" rule.

I've priced products for retail sales (some limited wholesale) and have been in marketing a good chunk of my life and would like to know how you would like to explain value-based pricing and premium pricing (as well at these other pricing strategies) and why it is not only widely used but breaks the above rule. Please explain this phenomenon and remember to resolve the paradox that higher cost will always result in lower sales except when it clearly doesn't.

Marketing strategies for a product not equal microeconomics.

How is marketing strategies NOT part of microeconomics?

https://en.wikipedia.org/wiki/Microeconomics

Microeconomics (from Greek prefix mikro- meaning "small") is a branch of economics that studies the behavior of individuals and firms in making decisions regarding the allocation of limited resources.[1] Typically, it applies to markets where goods or services are bought and sold. Microeconomics examines how these decisions and behaviors affect the supply and demand for goods and services, which determines prices, and how prices, in turn, determine the quantity supplied and quantity demanded of goods and services.[2][3]

http://www.investopedia.com/university/microeconomics/microeconomics3.asp

So every significant development in the study of consumer decision-making, and every aspect of the process are of great interest to the businesses community. The data and insights provided by this microeconomic research are studied by marketers and frequently employed in a firm's pricing, marketing strategies, advertising, packaging, product research and development, quality and quantity considerations, and in other factors designed to stimulate sales.

I would be happy to help you fill out any of those forms you need to get that refund on your graduate level economics classes.

Can the mods relocate this over to the pedantry thread?

 

[Nice Squirrel]

Microeconomics does not attempt to describe everything that happens in the market place.

I never said it did. You made an absolute statement attributing it to "basic economics" and it was shredded to bits.


That is all.

 

[dismal]

Microeconomics does not attempt to describe everything that happens in the market place.

I never said it did. You made an absolute statement attributing it to "basic economics" and it was shredded to bits.

That is all.

You have scored a great victory for those everywhere who wish to pretend the law of demand does not apply in the real world.

May you now enjoy the fruits of your willful rejection of knowledge.

 

[Nice Squirrel]

I never said it did. You made an absolute statement attributing it to "basic economics" and it was shredded to bits.

That is all.

You have scored a great victory for those everywhere who wish to pretend the law of demand does not apply in the real world.

May you now enjoy the fruits of your willful rejection of knowledge.

Do those fruits include sour grapes?

 

[ksen]

Basic Grammar 101: words mean things

 

[dismal]

You have scored a great victory for those everywhere who wish to pretend the law of demand does not apply in the real world.

May you now enjoy the fruits of your willful rejection of knowledge.

Do those fruits include sour grapes?

Mostly they include being baffled by observable everyday phenomena. Like why stores have sales, plumbers don't charge $10,000 to fix your sink, or why when people have trouble selling a house or a car they lower the price.

 

[Loren Pechtel]

What you're arguing seems clear enough. That people using less of something as it gets more expensive is a general theme in economics, even if it's not universal. You feel that it must apply to wages, and several other people here don't. No doubt you have examples to illustrate your point. Swedish doctors and bus drivers earn far more than their Pakistani counterparts, so obviously Sweden must have fewer doctors and bus drivers per head of population than Pakistan? Or maybe large companies that pay their senior managers much higher wages, will have fewer senior executives per employee than their smaller, cheaper counterparts? I suspect what people are really looking for is evidence that, given increasing wages, companies will forgo profit in order to hire fewer people, because that behaviour, although in line with the principal you're talking about, seems quite counter-intuitive.

What you are missing is that cost is relative to the economy they are in. The Swedish bus driver makes a lot more than the Pakistani one because the Swedish economy has a lot more money than the Pakistani one.

 

[AthenaAwakened]

Is the critique (from post #2) of the AEI chart (found in the OP) untrue or in error?

 

[Loren Pechtel]

Yes, this is a really dumb argument, but typical for someone who never got beyond "basic economics".

It is true that it is basic economics. But for some reason, some people think that "basic economics" = "universal truth". No competent and honest economist (or person with graduate economics courses) would make such a foolish conflation.

As a general rule, when the cost of X rises, people will wish to use less of X when all other influences on their use of X do not change. However, general rules are not expected to be valid all the time. Nor is it clear in this case that all the other influences on the demand for labor are constant.

Basic economics says that as the price rises the consumption drops. Exceptions exist but it's up to your side to show why labor is an exception to this.

 

[Nice Squirrel]

It is true that it is basic economics. But for some reason, some people think that "basic economics" = "universal truth". No competent and honest economist (or person with graduate economics courses) would make such a foolish conflation.

As a general rule, when the cost of X rises, people will wish to use less of X when all other influences on their use of X do not change. However, general rules are not expected to be valid all the time. Nor is it clear in this case that all the other influences on the demand for labor are constant.

Basic economics says that as the price rises the consumption drops. Exceptions exist but it's up to your side to show why labor is an exception to this.

No it isn't. Thanks for playing.

 

[Horatio Parker]

Why? Does the law of demand apply to ranges outside of $9-15 but get suspended within?

Someone working in the West for $1/hr is effectively unemployed.

What does this have to do with whether someone would have more demand for the lawn mowing service or less?

If we were talking about willingness of people to supply lawn mowing service I believe you are right. Fewer people would be willing to supply it if the government fixed the price per hour for labor at $1 than $1000

The situation in Seattle is in this universe, not a fantasy world of your own construction.

And the effectively employed point is highly relevant. Businesses that pay less than a living wage are offloading their expenses onto the state. That's an issue that concerns everybody.

So your position is the law of demand does not apply in the real world but only in fictional universes?

Have you ever been in a store and decided not to buy something because you thought the price was too high or is that the sort of thing that only happens in fictional universes too?

Sure demand and supply work, but it's not always clear cut as in your absurd examples.

To go to the other extreme, raising (or lowering) wages one penny/hr won't change hiring or consumption. The question is, at what point is a MW counterproductive. So far, there's no clear answer.

 

[dismal]

To go to the other extreme, raising (or lowering) wages one penny/hr won't change hiring or consumption. The question is, at what point is a MW counterproductive. So far, there's no clear answer.

Imagine there is big swimming pool. There are people and cats and dogs jumping in and out. There is wind. There is the gravitational pull of the moon. There is thermal expansion of the water as the day heats. The water level is up and down because of all these factors.

Someone throws a brick in the pool. Does the brick make the water level go up?

Yes.

Does anyone notice it went up? No. Can I measure that it went up with all that background noise? No.

Did it go up? Yes.

Raising the minimum wage 1 cent is like throwing a brick in a pool. It won't effect things much. It won't be noticeable for the other noise. But it will have some effect, and the effect will be in the direction of lower demand.

BTW, years ago when I worked for a company in the retail gasoline business the assumption was being 1 cent off the market for a gallon of gas would result in a 5-10% drop in sales.

Fortunately you guys weren't there with your convincing arguments that price had no effect on demand or gas prices might have been a lot higher.

 

[ksen]

Because human labor is equivalent to gasoline, peanut butter m&m's and Apple products.

 

[dismal]

Because human labor is equivalent to gasoline, peanut butter m&m's and Apple products.

How is it different in the context of the law of demand?

People prefer to pay more for it rather than less?

If that were true it seems like we wouldn't need a minimum wage.

 

[ksen]

Because human labor is equivalent to gasoline, peanut butter m&m's and Apple products.

How is it different in the context of the law of demand?

Human beings use their wages to satisfy their own demands.

Gasoline, peanut butter m&m's and Apple products do not use their cost to satisfy their own demands because, being inanimate objects, they don't have any.

 

[Horatio Parker]

To go to the other extreme, raising (or lowering) wages one penny/hr won't change hiring or consumption. The question is, at what point is a MW counterproductive. So far, there's no clear answer.

Imagine there is big swimming pool. There are people and cats and dogs jumping in and out. There is wind. There is the gravitational pull of the moon. There is thermal expansion of the water as the day heats. The water level is up and down because of all these factors.

Someone throws a brick in the pool. Does the brick make the water level go up?

Yes.

Does anyone notice it went up? No. Can I measure that it went up with all that background noise? No.

Did it go up? Yes.

Raising the minimum wage 1 cent is like throwing a brick in a pool. It won't effect things much. It won't be noticeable for the other noise. But it will have some effect, and the effect will be in the direction of lower demand.

BTW, years ago when I worked for a company in the retail gasoline business the assumption was being 1 cent off the market for a gallon of gas would result in a 5-10% drop in sales.

Fortunately you guys weren't there with your convincing arguments that price had no effect on demand or gas prices might have been a lot higher.

Gas isn't a good comparison. People will do less discretionary driving when gas prices are high, but they don't quit their jobs because it costs more to go to work.

Anyway, when was this? When gas was 15 cents/gallon or even a buck? One penny out of $9 is a hell of a lot less.

 

[dismal]

How is it different in the context of the law of demand?

Human beings use their wages to satisfy their own demands.

Gasoline, peanut butter m&m's and Apple products do not use their cost to satisfy their own demands because, being inanimate objects, they don't have any.

And therefore people prefer to pay more for labor? I don't follow. I have never heard stories of people haggling repairmen and barbers up in their price because they prefer to pay more for labor.

And why again do we need a minimum wage if people prefer to pay more for labor rather than less?