Well, no... "costs" and "what consumers are willing to pay" are both important factors that go into the price. If the manufacturer's costs go up, then the equilibrium price at which profits are maximized goes up too (although the manufacturer would make less absolute profit overall). That's the real misconception that I think you're pointing at: many people, including the OP, think that prices are completely determined by the seller. In reality, sellers are already maximally greedy, so they want to find this equilibrium price point that maximizes profits. This makes price a signal that they're measuring, not something that they directly control.
Minimum wage debates tend to sadden me, because there's always somebody saying "McDonald's can just compensate by charging $1 more for a burger", making this silly mistake. As if McDonald's is just leaving all that extra money on the table, until it's forced to collect it to pay wages...
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Notes -
Well, no... "costs" and "what consumers are willing to pay" are both important factors that go into the price. If the manufacturer's costs go up, then the equilibrium price at which profits are maximized goes up too (although the manufacturer would make less absolute profit overall). That's the real misconception that I think you're pointing at: many people, including the OP, think that prices are completely determined by the seller. In reality, sellers are already maximally greedy, so they want to find this equilibrium price point that maximizes profits. This makes price a signal that they're measuring, not something that they directly control.
Minimum wage debates tend to sadden me, because there's always somebody saying "McDonald's can just compensate by charging $1 more for a burger", making this silly mistake. As if McDonald's is just leaving all that extra money on the table, until it's forced to collect it to pay wages...
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