No, they are not.
The consumer price depends only on supply and demand. Fees don't influence none of it, only the cost of the selling party and thus his profit.
The consumer price depends only on supply and demand. Fees don't influence none of it, only the cost of the selling party and thus his profit.
Thinking that labor costs do not impact product costs is grossly ignorant.
No one is arguing that labor cost doesn't impact product cost, but the fact is that in general it doesn't impact product price.
Or to put it the other way: can you imagine a business not increasing product price as much as they can, regardless of the product cost, as long as the supply is matched?
If they can increase the price, why would they wait for cost to rise before doing so?
The outcome is that business/landlord already charge as much as they can, and increased cost doesn't change the product price, since they already chareg as much as they can.
Sure not all prices are infinitely elastic, but if Labor costs out strip the ability to prices to absorb them that do not mean the business simply magically makes them go away, no that business goes bankrupt and wages go to $0.
Owners / Investors demand a return on investment, if the market average is 8%, and business x is only returning 4% why would an investor continue to keep their capital there?
Worse still if inflation is 3% and the business is only returning 2% the investor is LOSING MONEY by keeping their capital in the business, better to cut their losses and move on
This mythical position where by businesses just "absorb the cost" because the prices are not elastic is pure fantasy
What are you on about? Of course McD will change prices relative to input expenditure. You can even see this across all the countries they serve. If there were to be a significant impact on margin, they can increase prices.
All fees are passed onto customers, that’s how you calculate profit margins.
>All fees are passed onto customers
is not even close to correct.
All businesses will increase prices to maintain the profits they need, up until what the market will bear - which is why taxes will also not end up pushing it too far, the gov isn’t stupid.
This is disproved very easily by reality - most places have increasing rent YoY. Same goes for house prices.
Because of low supply and large demand, like you say, landlords can charge monopoly prices. Not sure why you claim they don’t go up?
All this proves is that evolving market conditions lead to changes in price. Try charging 2030's market-rate rent in 2021, and see how many offers you get.
you are simply wrong
If local regulatory conditions cause your labor cost to go up, they are absolutely allowed to (and will) raise prices to compensate.
Like, lets say that the government adds a 20$ tax/fee on fast food, per burger sold. Clearly McDonalds would no longer be able to sell burgers for 4 dollars.
Thus price would increase. Or supply of burgers would go down (thereby only leaving higher priced burgers in the market).