(April 8, 2011 at 11:28 pm)reverendjeremiah Wrote: And who do you think you are fooling with this bottom up organization? So the libertarian companies ask their people "what price would you like for this Pepsi?" They say "free" The top of the organization says "no way". Well, I guess that settles it, the top of the organization had their say. It is now $1.00 a bottle, unless you are in a theme park, in which it becomes $5.00 a bottle. And the libs keep saying that "No need for government to control business..you little people are in control..no...really! Scouts honor!"Just because the top of the company has the final say on the price, does not mean they weren't persuaded by their consumers in setting that price. What you are showing is only part of your imaginary conversation.
Say that a company produces a soft drink, and puts it on the market. Consumers will want the product for the cheapest amount possible, and companies will want to gain the most profit from it. This is the mechanism by which companies set their prices; they want to set a price that is the highest price the majority of consumers will pay for it.
Say the costs of making the drink are $0.30 for each bottle. Selling the drink at $0.30 will get them the most amount of consumers, but won't make them any profit. Selling the drink for $0.50 each will make them a small amount of profit, but they will lose some consumers who aren't willing to fork out the extra $0.20. Selling the drink at $1.00 maximizes their profit, whilst maintaining that a large number of their consumers will purchase it (it won't be as many consumers as they got selling the drink for $0.30, but the increased price compensates that).
Theme Parks become a different matter. The demand for drinks is higher at a theme park, since you pay to get in, and can only consume food and drink bought in the park. Thus, the prices of such items will be more expensive. There are more people willing to pay those prices, and indeed, they do pay those prices (or the theme park would have reduced them by now).
Seriously, if you don't think that consumers ultimately have control over the prices of products, why don't Pepsi charge $10 for each drink? Or $20, or $100? Think about it. If they ever did that, they would lose practically all of their consumer base, and would start losing money fast. A good corporation finds the optimum amount to sell their product, such that the largest number of consumers are happy to buy it, and the profit generated is the highest.
