CHAPTER 6Price and Quantity Determination

“It isn't that they can't see the solution. It is that they can't see the problem.”

G.K. Chesterton


Price. Quantity.

If you are a producer, you are deeply concerned with these figures for your offerings.

If we hope to profit from any good or service, we must predict both reasonably accurately. To figure that out, we first must characterize the problems facing us. If we are to produce something, it will always have some specific features. The new electric car you make will have a particular horsepower and range. A novel cross‐town transport service you offer to a major city must have specific delivery times by distance and weight. An innovative dairy you put up might offer new product types with your distinct specifications, such as 3% milk in a three‐quart container. Producers like you and others are concerned with the profit potential of specific unique offerings. Average prices for similar goods and services might prove interesting to you and your fellow entrepreneurs. However, you and they will find that you will need more guidance for their product formulations or sales potential. Eventually, we have to get down to specifics.

Interestingly, we observe that most market characterizations to date tend to address the average products in any given industry, leaving the details buried in the conglomerate that makes the whole. Such analyses offer correct answers in the sense that they are defensible ...

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