I think there was something the other day about them or Norway removing a 24% tax on books. Looks like Scandinavians are going to reading books, eating chocolate, and drinking coffee.
I think there was something the other day about them or Norway removing a 24% tax on books.
Looks like Scandinavians are going to reading books, eating chocolate, and drinking coffee.
As someone who lives in a country with reduced tax on books (6% instead of 23%), I support that one at least. Being a source of knowledge, I think books should be as accessible as possible to...
As someone who lives in a country with reduced tax on books (6% instead of 23%), I support that one at least. Being a source of knowledge, I think books should be as accessible as possible to people who want/need to purchase them.
Maybe it's because I don't consume a lot of these products or maybe it's because I'm from a different country, but anyone from Denmark have any thoughts or insights into how much coffee, cake,...
Maybe it's because I don't consume a lot of these products or maybe it's because I'm from a different country, but anyone from Denmark have any thoughts or insights into how much coffee, cake, sweets, etc., do Danish eat?
This can't be a lot of savings for a typical family, right? Maybe a family who eats a whole cake per day and drinks a whole bag of coffee a day would see these savings. Otherwise, this saves you, what, all of $1.97 every other week?
I did see the paragraph about how much this would mean for the government, but I find it hard to believe this is anything to help families who are struggling, right?
The tax cut would cost the government 2.4 billion Danish kroner ($376 million) in lost revenue.
I’m thinking the same thing. I can’t help but think of one of my step mothers who would not even think of sweets as food, only as “junk” (i.e. “stop eating that junk and eat some real food”). If...
I’m thinking the same thing. I can’t help but think of one of my step mothers who would not even think of sweets as food, only as “junk” (i.e. “stop eating that junk and eat some real food”). If they want to help people struggling with food prices, shouldn’t they lower the taxes on staple foods instead of the luxuries? Or perhaps those are already untaxed.
Yes, it would be better if we could lower tax on food in general of just fruit and vegetables. This will most likely just result in more consumption of sweets. People generally buy more candy and...
Yes, it would be better if we could lower tax on food in general of just fruit and vegetables. This will most likely just result in more consumption of sweets. People generally buy more candy and chocolate when it is on sale. This is really just mostly pandering before an election.
We have a flat 25% sale tax on everything in Denmark, so the argument for decades has been that we can't possibly deal with different sales tax on different items. And the general assumption that it won't actually result in lower prices for consumers, but just increased profits. Both valid concerns as there will be a transition period for various IT system to adapt and so forth, but it is also a bit annoying to see it all the time as a sort "giving up" answer. Because we have had this high sales tax forever, we can never at least try to change it.
So yeah, the short answer is basically that it is easier and cheaper to simply remove the extra taxes on chocolate and coffee, rather than do something about the general sales tax on healthy food.
(Not an economist, basically no economic knowledge, probably not very legitimate for me to broadcast my personal uninformed opinion) This is pandering to the electorate and won't actually lower...
(Not an economist, basically no economic knowledge, probably not very legitimate for me to broadcast my personal uninformed opinion)
This is pandering to the electorate and won't actually lower prices. I've become convinced that consumer goods' prices have much more to do with how much people are willing to pay for them than how much it cost to produce (exhibit A; regional product are more expensive in their home region, where they are desirable, than in surrounding region where they had to be imported so should cost more). Lowering taxes in this situation just means higher profit. The "hand of the market" doesn't work very well for consumer goods, consumers as a whole are too sensitive to trends and perception.
High prices are signals to producers to produce more and induce people to join production. Farmers switch to more profitable or invest in machinery and land to increase production: there is a lag...
High prices are signals to producers to produce more and induce people to join production. Farmers switch to more profitable or invest in machinery and land to increase production: there is a lag of a few years, however, before supply catches up to demand.
Currently, poor weather and pests are negatively impacting cacao farms in West Africa. So, the supply is diminished. The price increases should be interpreted by the consumer as a signal to consume less.
Another trend is that the world is rapidly becoming wealthy. The global middle class is estimated to be 4+ billion. Western consumers are competing for luxury foods—I mean, let's call chocolate, coffee, and sugar what they are: luxuries—with newly wealthy Asian, Latin American, Middle Eastern, South Asian, and African consumers that have developed taste for luxury foods too. Even though food prices continue to creep up, invisible to Western consumers is the huge expansion in both basic and luxury food production around the world to produce so much for Western and Non-Western middle class consumers.
I think people in Europe and America forget that the rest of the world don't live in mud huts anymore. They have increasingly Western lifestyles, glittering metropoli, personal automobiles, air conditioning, computers and smartphones, shopping malls, and so on. And their money is competing for the same luxury goods.
Thank you for taking the time to explain this to me. This makes a lot of sense. I did indeed forget about the third world coming into the competion for luxuries. But how does that square with my...
Thank you for taking the time to explain this to me. This makes a lot of sense. I did indeed forget about the third world coming into the competion for luxuries.
But how does that square with my exemple of regional products being more expensive in their home region? Shouldn't price equalize as supermarkets rearrange which location stock more of the products.
Why are the exact same products sometime half the price in spain than in france, if not because the supermarket adjust it's expectation to locals' income.
Also, how about the web service industry: Youtube and Netflix prices increase for example. Can they not keep building datacenter, why would they send the signal to consume less?
Don't feel like you have to put in even more time to explain again if you don't feel like it, if you don't I'll go read a book, no worries.
Oh, this is something I find quite interesting to explain. :) I enjoyed reading economics in school, and I've always been curious about learning what the various macro and microeconomic forces...
Oh, this is something I find quite interesting to explain. :) I enjoyed reading economics in school, and I've always been curious about learning what the various macro and microeconomic forces shape our world. Many people think there is some conspiracy or cabal controlling everything, but such thinking overlooks the dizzyingly complex array of interactions between our legal system, technology, society and culture (Labubus! Dubai chocolate!), the biosphere, and, well, everything. There's obviously a lot of bad stuff, but people forget that there's also a lot of good stuff happening in the world, invisible to us. I think the fact that ice cream was once only accessible to European elites but is now being enjoyed by many millions of definitely-not-elite children in across countries like India, Nigeria, and Brazil is kinda amazing.
Why are the exact same products sometime half the price in spain than in france, if not because the supermarket adjust it's expectation to locals' income.
Agricultural production is surprisingly one of the smaller cost components of a grocery product.
See the pie chart in this article from the USDA, Food Price Transmissions from Farm to Retail. It's written for the US in 2011, but the figures are probably similar in Europe, where the food industry has a fundamentally similar structure.
Only ~11% of the product cost is agricultural. The rest—food processing, transportation, warehousing, retail, finance legal, insurance, advertising—make up the bulk of the product cost, and those have local labor cost as a major component. In short, when we buy a chocolate bar or any (particularly processed) food product, we're mostly paying for:
A decorated, air conditioned grocery store that offers a nice shopping experience: attractively arranged products, car parking, a shopping cart, staff. There's a fixed cost component to displaying and keeping the product on the shelf.
Paying for someone to load it from the truck and put it on the shelf
Paying for someone to transport it from the warehouse or distribution center in a refrigerated truck so the chocolate doesn't melt
Paying for storage in a refrigerated warehouse (again so it doesn't melt)
Paying for someone to turn cocoa, milk, sugar, etc. into a chocolate bar
Paying for someone to research the market and design the product. They figure out that we and people like us are really into chocolate bars that have honeycomb chunks or are soy-free (no lecithin).
Paying for advertising so we know about and desire Cadbury Flake chocolate bars.
Paying for insurance and lawyers in case we get sick from a bad batch, somehow
That said, wealthier markets are more profitable. That also invite intense competition for affluent consumers who are pickier about consumer products. In wealthy markets, competition goes upward rather downward, which drags up the price of low-end products because it's not worthwhile to try to compete to go under the low-end products: generally for consumer goods like chocolates, affluent consumers are looking to buy higher-quality goods over more quantity of the same mid-tier goods.
That being said, the most profitable segment is in food processing: turning commodity inputs (cocoa, milk, sugar, lecithin) into products that people recognize and repeatedly want to buy (Cadbury Flake). It's hard to break into because established mainstream players have advantage of scale (factories, machinery, engineers, dedicated supply chains, advertising and product recognition), which is why small players specialize in artisanal, high-end goods (high labor costs, target niche markets that are uneconomical for large players to reach), which is how you end up with $12 strawberry matcha bars or $15 single-origin dark chocolate bars. There could be more competition with the likes of Nestle, Cadbury, and Hershey, but their operations are probably so efficient that it's not worthwhile trying to pursue making yet another generic mainstream chocolate bar.
Also, how about the web service industry: Youtube and Netflix prices increase for example. Can they not keep building datacenter, why would they send the signal to consume less?
Streaming price increases have induced people to reduce the number of subscriptions. They probably calculated that they can raise prices and lose a few customers but make more money overall. It's tricky because while people are more willing to switch vendors for commodity goods like milk, people tend to be loyal to certain TV shows, so they're more willing to bear the cost.
For them, infrastructure isn't the main cost. I read that Netflix spends $1bn a year on AWS for cloud services, storage, etc. in addition to its own infrastructure, so I'd probably estimate their infrastructure spending to be between $1–2bn? But they spent $18bn on programming last year, so 9~18x.
Thank you, price difference between bordering countries finally makes a bit of sense! But then since streaming service can (and do) raise their price so long as the customers globally tolerate it,...
Thank you, price difference between bordering countries finally makes a bit of sense!
They probably calculated that they can raise prices and lose a few customers but make more money overall.
But then since streaming service can (and do) raise their price so long as the customers globally tolerate it, why assume it's any different for supermarkets?
Whats stopping Walmart from raising the price of mashed potatoes to as high as it can go (after calculating the optimum balance with customer loss)?
And to circle back to this thread's topic, wouldn't removing taxes on Netflix/chocolate just mean that Netflix/chocolate_sellers will raise their prices accordingly (to return to the same optimal point)?
Nothing. That is what they're doing. The optimal point won't be the same. It'll be somewhere in the middle, depending on the dynamics of the demand curve. For a product with highly elastic demand,...
Whats stopping Walmart from raising the price of mashed potatoes to as high as it can go (after calculating the optimum balance with customer loss)?
Nothing. That is what they're doing.
And to circle back to this thread's topic, wouldn't removing taxes on Netflix/chocolate just mean that Netflix/chocolate_sellers will raise their prices accordingly (to return to the same optimal point)?
The optimal point won't be the same. It'll be somewhere in the middle, depending on the dynamics of the demand curve.
For a product with highly elastic demand, when a tax is removed almost the entire value of the tax will be reduced from the price to maintain profit optimality. For a product with highly inelastic demand, the price will barely move.
So... Are you agreeing that my initial comment is 100% correct (with some important nuances brought about by u/EgoEimi) ? The one where I say prices mostly depend on how much buyer find acceptable...
So... Are you agreeing that my initial comment is 100% correct (with some important nuances brought about by u/EgoEimi) ? The one where I say prices mostly depend on how much buyer find acceptable and will let the sellers get away with. And if we lower the taxes, people are still used to the old prices, so the sellers will just raise the prices back to what they where before the tax break.
No to both? I'm kinda confused how you got to that conclusion. For No, because that ignores the supply side entirely, when it's equally as important. It's the law of supply and demand, in the end....
No to both? I'm kinda confused how you got to that conclusion.
For
The one where I say prices mostly depend on how much buyer find acceptable and will let the sellers get away with.
No, because that ignores the supply side entirely, when it's equally as important. It's the law of supply and demand, in the end.
And if we lower the taxes, people are still used to the old prices, so the sellers will just raise the prices back to what they where before the tax break.
Also no. I explained what would happen before, so I'll just paste it again
The optimal point won't be the same. It'll be somewhere in the middle, depending on the dynamics of the demand curve.
For a product with highly elastic demand, when a tax is removed almost the entire value of the tax will be reduced from the price to maintain profit optimality. For a product with highly inelastic demand, the price will barely move.
Well, if Wal-Mart increases prices until people stop buying (simplifying obviously, they increase price until enough people stop buying that it makes less profit overall), then supply has no (or...
I'm kinda confused how you got to that conclusion.
Well, if Wal-Mart increases prices until people stop buying (simplifying obviously, they increase price until enough people stop buying that it makes less profit overall), then supply has no (or very very little) impact (as long as supply is more than demand).
Netflix increased price just because it could get away with it. Supply hadn't changed, demand hadn't changed.
The optimal point won't be the same. It'll be somewhere in the middle, depending on the dynamics of the demand curve.
In my mind, even if price go halfway back up after tax cut, that is still undesirable since that's equivalent to the state losing (not earning) 2 dollars so that consumer can spare 1 dollar and the big store can earn 1 more dollars.
I don't think that really makes sense. Let's say that supply in a toy example is represented by 5x with a 20% tax applied, and demand is represented by -5x + 100. The optimal point of production...
Well, if Wal-Mart increases prices until people stop buying (simplifying obviously, they increase price until enough people stop buying that it makes less profit overall), then supply has no (or very very little) impact (as long as supply is more than demand).
I don't think that really makes sense. Let's say that supply in a toy example is represented by 5x with a 20% tax applied, and demand is represented by -5x + 100. The optimal point of production there is 55; if we reduce the supply curve to 4x, then the new optimal point of production is 48. And you can see how, depending on the slope of the demand, the difference in the price between the two points becomes more accentuated.
Remember, it's an optimization problem. As a firm, the equation you're trying to solve is M_r = M_C - these are first derivatives. When the supply curve shifts downward, that looks like a decrease in M_C.
Netflix increased price just because it could get away with it. Supply hadn't changed, demand hadn't changed.
Neither of those are true, though. For one, supply changed A LOT for Netflix. Remember, when Netflix first came into the scene, it could get the rights to any movie or TV shows for pennies on the dollar because no one took it seriously. Then, everyone realized that streaming was too important to ignore. Netflix's final bid for The Office was $90m - only to be outbid by NBC for $100m.
Not only did contract rights become sharply expensive, but many chose to withdraw from Netflix entirely, forcing Netflix to become not just a streaming site, but a movie and TV show producer - a famously capital intensive business.
So the supply curve for Netflix has done nothing but shoot upwards over the years.
Demand, too, changes. Things like the pandemic, or the stimulus package cause massive shifts upward in demand.
In my mind, even if price go halfway back up after tax cut, that is still undesirable since that's equivalent to the state losing (not earning) 2 dollars so that consumer can spare 1 dollar and the big store can earn 1 more dollars.
Only if you view as an adversarial point of view. From the Danish government's point of view, the local coffee shop is just as much one of their constituents (or subjects, I suppose - still is a monarchy) as the people buying the coffee. Businesses provide tax revenue from their incomes, make people's lives happier by providing services, and pay people wages.
I'm a tad confused. Did you previously think that prices were entirely based on the cost of production? Do they not teach the law of supply and demand at schools anymore?
I've become convinced that consumer goods' prices have much more to do with how much people are willing to pay for them than how much it cost to produce
I'm a tad confused. Did you previously think that prices were entirely based on the cost of production? Do they not teach the law of supply and demand at schools anymore?
While politely expressed, i detect undertone of condescension ("do they not teach ... at school anymore"). And I warned about my lack of education on the topic. No, I formerly thought prices...
While politely expressed, i detect undertone of condescension ("do they not teach ... at school anymore"). And I warned about my lack of education on the topic.
No, I formerly thought prices reflected the equilibrium point where about as many people can buy it as we can produce (supply and demand). This might apply to general goods like steel or oil, but not consumer goods. In actuality we can produce arbitrarily larger quantities of things than people could ever buy, so price actually just reflects how much money buyers find is acceptable (and dump the excess). Otherwise you'd expect competition to drive profit lower and lower (you don't observe that, in fact profits tend to increase).
I think there was something the other day about them or Norway removing a 24% tax on books.
Looks like Scandinavians are going to reading books, eating chocolate, and drinking coffee.
As someone who lives in a country with reduced tax on books (6% instead of 23%), I support that one at least. Being a source of knowledge, I think books should be as accessible as possible to people who want/need to purchase them.
That was Denmark I think,
Between the two tax savings I'd rather have the books one, myself
this reminded me of https://www.theguardian.com/society/2022/nov/10/uk-retailers-not-passing-on-tampon-tax-savings-to-women-report-says
Maybe it's because I don't consume a lot of these products or maybe it's because I'm from a different country, but anyone from Denmark have any thoughts or insights into how much coffee, cake, sweets, etc., do Danish eat?
This can't be a lot of savings for a typical family, right? Maybe a family who eats a whole cake per day and drinks a whole bag of coffee a day would see these savings. Otherwise, this saves you, what, all of $1.97 every other week?
I did see the paragraph about how much this would mean for the government, but I find it hard to believe this is anything to help families who are struggling, right?
I’m thinking the same thing. I can’t help but think of one of my step mothers who would not even think of sweets as food, only as “junk” (i.e. “stop eating that junk and eat some real food”). If they want to help people struggling with food prices, shouldn’t they lower the taxes on staple foods instead of the luxuries? Or perhaps those are already untaxed.
Yes, it would be better if we could lower tax on food in general of just fruit and vegetables. This will most likely just result in more consumption of sweets. People generally buy more candy and chocolate when it is on sale. This is really just mostly pandering before an election.
We have a flat 25% sale tax on everything in Denmark, so the argument for decades has been that we can't possibly deal with different sales tax on different items. And the general assumption that it won't actually result in lower prices for consumers, but just increased profits. Both valid concerns as there will be a transition period for various IT system to adapt and so forth, but it is also a bit annoying to see it all the time as a sort "giving up" answer. Because we have had this high sales tax forever, we can never at least try to change it.
So yeah, the short answer is basically that it is easier and cheaper to simply remove the extra taxes on chocolate and coffee, rather than do something about the general sales tax on healthy food.
I believe the coffee consumption is ridiculously high (and all the Scandi states are high last I checked). I've always wondered why that is.
Archive link https://archive.is/84KHo
(Not an economist, basically no economic knowledge, probably not very legitimate for me to broadcast my personal uninformed opinion)
This is pandering to the electorate and won't actually lower prices. I've become convinced that consumer goods' prices have much more to do with how much people are willing to pay for them than how much it cost to produce (exhibit A; regional product are more expensive in their home region, where they are desirable, than in surrounding region where they had to be imported so should cost more). Lowering taxes in this situation just means higher profit. The "hand of the market" doesn't work very well for consumer goods, consumers as a whole are too sensitive to trends and perception.
High prices are signals to producers to produce more and induce people to join production. Farmers switch to more profitable or invest in machinery and land to increase production: there is a lag of a few years, however, before supply catches up to demand.
Currently, poor weather and pests are negatively impacting cacao farms in West Africa. So, the supply is diminished. The price increases should be interpreted by the consumer as a signal to consume less.
Another trend is that the world is rapidly becoming wealthy. The global middle class is estimated to be 4+ billion. Western consumers are competing for luxury foods—I mean, let's call chocolate, coffee, and sugar what they are: luxuries—with newly wealthy Asian, Latin American, Middle Eastern, South Asian, and African consumers that have developed taste for luxury foods too. Even though food prices continue to creep up, invisible to Western consumers is the huge expansion in both basic and luxury food production around the world to produce so much for Western and Non-Western middle class consumers.
I think people in Europe and America forget that the rest of the world don't live in mud huts anymore. They have increasingly Western lifestyles, glittering metropoli, personal automobiles, air conditioning, computers and smartphones, shopping malls, and so on. And their money is competing for the same luxury goods.
Thank you for taking the time to explain this to me. This makes a lot of sense. I did indeed forget about the third world coming into the competion for luxuries.
But how does that square with my exemple of regional products being more expensive in their home region? Shouldn't price equalize as supermarkets rearrange which location stock more of the products.
Why are the exact same products sometime half the price in spain than in france, if not because the supermarket adjust it's expectation to locals' income.
Also, how about the web service industry: Youtube and Netflix prices increase for example. Can they not keep building datacenter, why would they send the signal to consume less?
Don't feel like you have to put in even more time to explain again if you don't feel like it, if you don't I'll go read a book, no worries.
Oh, this is something I find quite interesting to explain. :) I enjoyed reading economics in school, and I've always been curious about learning what the various macro and microeconomic forces shape our world. Many people think there is some conspiracy or cabal controlling everything, but such thinking overlooks the dizzyingly complex array of interactions between our legal system, technology, society and culture (Labubus! Dubai chocolate!), the biosphere, and, well, everything. There's obviously a lot of bad stuff, but people forget that there's also a lot of good stuff happening in the world, invisible to us. I think the fact that ice cream was once only accessible to European elites but is now being enjoyed by many millions of definitely-not-elite children in across countries like India, Nigeria, and Brazil is kinda amazing.
Agricultural production is surprisingly one of the smaller cost components of a grocery product.
See the pie chart in this article from the USDA, Food Price Transmissions from Farm to Retail. It's written for the US in 2011, but the figures are probably similar in Europe, where the food industry has a fundamentally similar structure.
Only ~11% of the product cost is agricultural. The rest—food processing, transportation, warehousing, retail, finance legal, insurance, advertising—make up the bulk of the product cost, and those have local labor cost as a major component. In short, when we buy a chocolate bar or any (particularly processed) food product, we're mostly paying for:
That said, wealthier markets are more profitable. That also invite intense competition for affluent consumers who are pickier about consumer products. In wealthy markets, competition goes upward rather downward, which drags up the price of low-end products because it's not worthwhile to try to compete to go under the low-end products: generally for consumer goods like chocolates, affluent consumers are looking to buy higher-quality goods over more quantity of the same mid-tier goods.
That being said, the most profitable segment is in food processing: turning commodity inputs (cocoa, milk, sugar, lecithin) into products that people recognize and repeatedly want to buy (Cadbury Flake). It's hard to break into because established mainstream players have advantage of scale (factories, machinery, engineers, dedicated supply chains, advertising and product recognition), which is why small players specialize in artisanal, high-end goods (high labor costs, target niche markets that are uneconomical for large players to reach), which is how you end up with $12 strawberry matcha bars or $15 single-origin dark chocolate bars. There could be more competition with the likes of Nestle, Cadbury, and Hershey, but their operations are probably so efficient that it's not worthwhile trying to pursue making yet another generic mainstream chocolate bar.
Streaming price increases have induced people to reduce the number of subscriptions. They probably calculated that they can raise prices and lose a few customers but make more money overall. It's tricky because while people are more willing to switch vendors for commodity goods like milk, people tend to be loyal to certain TV shows, so they're more willing to bear the cost.
For them, infrastructure isn't the main cost. I read that Netflix spends $1bn a year on AWS for cloud services, storage, etc. in addition to its own infrastructure, so I'd probably estimate their infrastructure spending to be between $1–2bn? But they spent $18bn on programming last year, so 9~18x.
Thank you, price difference between bordering countries finally makes a bit of sense!
But then since streaming service can (and do) raise their price so long as the customers globally tolerate it, why assume it's any different for supermarkets?
Whats stopping Walmart from raising the price of mashed potatoes to as high as it can go (after calculating the optimum balance with customer loss)?
And to circle back to this thread's topic, wouldn't removing taxes on Netflix/chocolate just mean that Netflix/chocolate_sellers will raise their prices accordingly (to return to the same optimal point)?
Nothing. That is what they're doing.
The optimal point won't be the same. It'll be somewhere in the middle, depending on the dynamics of the demand curve.
For a product with highly elastic demand, when a tax is removed almost the entire value of the tax will be reduced from the price to maintain profit optimality. For a product with highly inelastic demand, the price will barely move.
So... Are you agreeing that my initial comment is 100% correct (with some important nuances brought about by u/EgoEimi) ? The one where I say prices mostly depend on how much buyer find acceptable and will let the sellers get away with. And if we lower the taxes, people are still used to the old prices, so the sellers will just raise the prices back to what they where before the tax break.
No to both? I'm kinda confused how you got to that conclusion.
For
No, because that ignores the supply side entirely, when it's equally as important. It's the law of supply and demand, in the end.
Also no. I explained what would happen before, so I'll just paste it again
Well, if Wal-Mart increases prices until people stop buying (simplifying obviously, they increase price until enough people stop buying that it makes less profit overall), then supply has no (or very very little) impact (as long as supply is more than demand).
Netflix increased price just because it could get away with it. Supply hadn't changed, demand hadn't changed.
In my mind, even if price go halfway back up after tax cut, that is still undesirable since that's equivalent to the state losing (not earning) 2 dollars so that consumer can spare 1 dollar and the big store can earn 1 more dollars.
I don't think that really makes sense. Let's say that supply in a toy example is represented by 5x with a 20% tax applied, and demand is represented by -5x + 100. The optimal point of production there is 55; if we reduce the supply curve to 4x, then the new optimal point of production is 48. And you can see how, depending on the slope of the demand, the difference in the price between the two points becomes more accentuated.
Remember, it's an optimization problem. As a firm, the equation you're trying to solve is M_r = M_C - these are first derivatives. When the supply curve shifts downward, that looks like a decrease in M_C.
Neither of those are true, though. For one, supply changed A LOT for Netflix. Remember, when Netflix first came into the scene, it could get the rights to any movie or TV shows for pennies on the dollar because no one took it seriously. Then, everyone realized that streaming was too important to ignore. Netflix's final bid for The Office was $90m - only to be outbid by NBC for $100m.
Not only did contract rights become sharply expensive, but many chose to withdraw from Netflix entirely, forcing Netflix to become not just a streaming site, but a movie and TV show producer - a famously capital intensive business.
So the supply curve for Netflix has done nothing but shoot upwards over the years.
Demand, too, changes. Things like the pandemic, or the stimulus package cause massive shifts upward in demand.
Only if you view as an adversarial point of view. From the Danish government's point of view, the local coffee shop is just as much one of their constituents (or subjects, I suppose - still is a monarchy) as the people buying the coffee. Businesses provide tax revenue from their incomes, make people's lives happier by providing services, and pay people wages.
I'm a tad confused. Did you previously think that prices were entirely based on the cost of production? Do they not teach the law of supply and demand at schools anymore?
While politely expressed, i detect undertone of condescension ("do they not teach ... at school anymore"). And I warned about my lack of education on the topic.
No, I formerly thought prices reflected the equilibrium point where about as many people can buy it as we can produce (supply and demand). This might apply to general goods like steel or oil, but not consumer goods. In actuality we can produce arbitrarily larger quantities of things than people could ever buy, so price actually just reflects how much money buyers find is acceptable (and dump the excess). Otherwise you'd expect competition to drive profit lower and lower (you don't observe that, in fact profits tend to increase).
Let them eat cake?
/noise