from today's San Antonio Express News:
http://www.expressnews.com/food/restaurants/article/Tasty-treats-for-tax-relief-5393584.php#/0
Discuss supply, demand, equilibrium price, own price elasticity, income elasticity, and cross-price elasticity with respect to a $1,500 shot.
Also considering signaling and whether this item fills a signaling function.
http://www.expressnews.com/food/restaurants/article/Tasty-treats-for-tax-relief-5393584.php#/0
Discuss supply, demand, equilibrium price, own price elasticity, income elasticity, and cross-price elasticity with respect to a $1,500 shot.
Also considering signaling and whether this item fills a signaling function.
I can't view the full article because I'm not a San Antonio Express reader/member, but I think I get the gist of the issue. So, in new and improved bulletized fashion, here we go!
ReplyDelete- Supply of a product like gourmet Scotch that commands $1500 a shot must be tightly controlled. Producers cannot produce too much for this would make the booze become less scarce. Supply going up would move the price along the price curve. Lower prices.
-However, we would not want to do that. Sure, Glenfiddich could make up for lost profit on lowered prices through increased volume, but half of the marketing message here is value. This is the GOOD STUFF. We don't have to tell you how good it is, or spend exorbitant amounts on ads. The stuff is obviously good. It's $1500 a shot!
-So who would buy booze that's $1500 a shot? People trying to signal that they are a big shot. Just as a man who buys dozens of roses is signalling how much he loves her (and further implying how much he can provide for her ... $$$), someone who sits down at the bar and orders a $1500 shot is signalling that they are big time. They are important, they are someone to be taken seriously.
-Why do they have the ability to spend this much? Because of their high income, goods are more elastic to them. Just as a $5.00 box of cereal is fairly elastic to me, a $1500 shot of booze is elastic to a multi-millionaire. Especially if someone is there to watch them order it.
That's my SWAG.