JamesInFlorida
Senior Member
- Dec 18, 2010
- 1,501
- 186
- 48
Lastly I said the equilibrium price is currently skewed towards the oil companies. An equilibrium price is when the supplier and market meet at a price level they both feel is acceptable.
So here's an easy example for any "mental midget" who can't see that. I'll use the previously mentioned corn. I'll use nice and easy numbers.
-There's 100 people who want corn, and another 100 people who want oil.
-There are 5 companies that supply corn, and 10 that support oil.
-Both prices (or the equilibrium), are currently too high, and the public isn't happy with them.
The corn companies can now:
1. lower the price to add more incentives for the market to purchase their corn over the 4 other companies
2. raise the quality of their corn, which costs more money-thus they have to charge more money, or bite a bullet on profits (not revenues)
3. keep the prices the same-which many of the 100 people will simply buy peas, string beans, or some other vegetable-and not eat corn.
The oil companies can now:
1. same as #1 for corn
2. same as #2 for corn
3. keep the prices the same-which many of the 100 people will....still have to purchase oil in order to get to work, school, buy plastic, buy almost every product from almost any store (as those products needs to be shipped-which uses up oil).
Kid, you're fucked up. Not worth my time.
Great point. You really told me.