You really should take an intro class to microeconomics. If a company charges more than the demand curve they will make less money because they'll make more money per unit but overall sell less and make less revenue. If is in the company's best interest, even as a monopoly, to charge to a price at the demand curve on the line where marginal costs equal marginal revenue - that is where they will maximize their profits. What a product is "really worth" is the demand, and there is an exact point where production efficiency and profits are maximized, and it isn't at all like what you think. And even worse to your case, weed production would probably be monopolistic competition (unless anyone can grow their own, in which case you have perfect competition and there are zero economic profits in the long run as firms enter and leave until equilibrium is met) which means that in the long run they will be forced to sell at a point that is exactly tangent to their average cost curve, which means that no, in no situation would they ever charge more or produce more (SUPPLY) than what the market is willing to pay (DEMAND) because business like to do this thing called maximizing their profits.Originally Posted by djwolford
A little thing called suppy and demand.
Reply With Quote
Bookmarks