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Do markets work when demand is inelastic?

moneymike82
Posts: 2
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10/27/2016 1:10:32 AM
Posted: 1 month ago
For things like college tuition and more so health care where demand will always be "fixed", can a market really help these costs? I'm genuinely asking. I am not trying to start a fight.

It would seem to me that for goods and services that people absolutely MUST have, you can simply charge whatever you want and it won't have any effect on demand.
To improve is to change; to be perfect is to change often."
bballcrook21
Posts: 4,468
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10/27/2016 2:07:16 AM
Posted: 1 month ago
At 10/27/2016 1:10:32 AM, moneymike82 wrote:
For things like college tuition and more so health care where demand will always be "fixed", can a market really help these costs? I'm genuinely asking. I am not trying to start a fight.

It would seem to me that for goods and services that people absolutely MUST have, you can simply charge whatever you want and it won't have any effect on demand.

They can charge as much as they want, except people will not be able to pay if the price is too high - also, if people are angry at the price (even though it's inelastic, people still prefer cheaper prices), then they will find an alternative, so long as a free and competitive market exists.
If you put the federal government in charge of the Sahara Desert, in 5 years there'd be a shortage of sand. - Friedman

Underlying most arguments against the free market is a lack of belief in freedom itself. -Friedman

Nothing is so permanent as a temporary government program. - Friedman

Society will never be free until the last Democrat is strangled with the entrails of the last Communist.
moneymike82
Posts: 2
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10/27/2016 4:06:40 AM
Posted: 1 month ago
At 10/27/2016 2:07:16 AM, bballcrook21 wrote:
At 10/27/2016 1:10:32 AM, moneymike82 wrote:
For things like college tuition and more so health care where demand will always be "fixed", can a market really help these costs? I'm genuinely asking. I am not trying to start a fight.

It would seem to me that for goods and services that people absolutely MUST have, you can simply charge whatever you want and it won't have any effect on demand.

They can charge as much as they want, except people will not be able to pay if the price is too high - also, if people are angry at the price (even though it's inelastic, people still prefer cheaper prices), then they will find an alternative, so long as a free and competitive market exists.

Just playing Devil's advocate. Nobody chooses to die and very few people would choose the to lose the added income and quality of life that comes with a college education.
To improve is to change; to be perfect is to change often."
Chang29
Posts: 732
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10/28/2016 2:33:55 AM
Posted: 1 month ago
At 10/27/2016 1:10:32 AM, moneymike82 wrote:
For things like college tuition and more so health care where demand will always be "fixed", can a market really help these costs? I'm genuinely asking. I am not trying to start a fight.

It would seem to me that for goods and services that people absolutely MUST have, you can simply charge whatever you want and it won't have any effect on demand.

First, as opposed to what other method of distribution? Markets are a peaceful method of transferring goods and services, whereas not market methods like government require violence.

Mostly education and medical services are private goods (rival and excludable), with some parts of each being a club good (non-rival and excludable). When looking at either a private or club good markets have a proven record of providing the best quality of service at the lowest cost with the least violence.
A free market anti-capitalist

If it can be de-centralized, it will be de-centralized.
bballcrook21
Posts: 4,468
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10/28/2016 2:43:03 AM
Posted: 1 month ago
At 10/27/2016 4:06:40 AM, moneymike82 wrote:
At 10/27/2016 2:07:16 AM, bballcrook21 wrote:
At 10/27/2016 1:10:32 AM, moneymike82 wrote:
For things like college tuition and more so health care where demand will always be "fixed", can a market really help these costs? I'm genuinely asking. I am not trying to start a fight.

It would seem to me that for goods and services that people absolutely MUST have, you can simply charge whatever you want and it won't have any effect on demand.

They can charge as much as they want, except people will not be able to pay if the price is too high - also, if people are angry at the price (even though it's inelastic, people still prefer cheaper prices), then they will find an alternative, so long as a free and competitive market exists.

Just playing Devil's advocate. Nobody chooses to die and very few people would choose the to lose the added income and quality of life that comes with a college education.

Except you must have the ability to pay for something to receive it, especially if it's an intangible service such as healthcare. Money isn't infinite.
If you put the federal government in charge of the Sahara Desert, in 5 years there'd be a shortage of sand. - Friedman

Underlying most arguments against the free market is a lack of belief in freedom itself. -Friedman

Nothing is so permanent as a temporary government program. - Friedman

Society will never be free until the last Democrat is strangled with the entrails of the last Communist.
Quadrunner
Posts: 1,074
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10/28/2016 9:24:40 PM
Posted: 1 month ago
At 10/27/2016 4:06:40 AM, moneymike82 wrote:
At 10/27/2016 2:07:16 AM, bballcrook21 wrote:
At 10/27/2016 1:10:32 AM, moneymike82 wrote:
For things like college tuition and more so health care where demand will always be "fixed", can a market really help these costs? I'm genuinely asking. I am not trying to start a fight.

It would seem to me that for goods and services that people absolutely MUST have, you can simply charge whatever you want and it won't have any effect on demand.

They can charge as much as they want, except people will not be able to pay if the price is too high - also, if people are angry at the price (even though it's inelastic, people still prefer cheaper prices), then they will find an alternative, so long as a free and competitive market exists.

Just playing Devil's advocate. Nobody chooses to die and

The thing is, people buy the most competitive insurance they can that provides quality health care, and the most competitive insurance companies go through the most efficient health care systems. So long as monopoly like systems are minimized the effect of supply should be sufficient for capping health costs in my opinion.

very few people would choose the to lose the added income and quality of life that comes with a college education.

I'm one of those people. Income is not of great concern to my quality of life, so long as I have enough, which for my standards is well within the grasp of a high school education. Still went to college, but because its the direction I wanted to go. Its not as uncommon as one might think.
Wisdom is found where the wise seek it.