Which means that, if we raise McDonald's production costs by increasing the wages of the workers, the price isn't going to change. Thus the price is not determined by the cost of production of an item. The capitalists charge the absolute maximum they can get away with, that ability being limited by the competition that comes from alternative suppliers.
#How much does the double big mac cost free#
Which leads to our conclusion on pricing in a capitalist and free market economy. Wendy's, Jack in the Box, In and Out, there's a multiplicity of places where we can go to fur our arteries. What limits McDonald's ability to entirely empty our wallets every time we want a hamburger is that there are other people who will also sell us one. Well, what else can we surmise about a rapacious capitalist organisation? In that ruthless pursuit of gelt and pilf for its shareholders it is going to gouge the customers for the absolute maximum that it can, yes? This is what capitalists do: we hear people complaining about that all the time as well. We know this absolutely because this is the very thing that everyone is complaining about: McDonald's cares so much about profits that it's not paying a living wage to its workers. It cares only about the profits being made for its shareholders, not for the wider group of stakeholders that is its employees and the community. We all know that McDonald's is indeed a rapacious capitalist organisation. What do people expect will happen when prices go up 17%? If McDonald’s could raise its prices by that much without lowering demand they would.
Perhaps not much, not as much as some alarmists claim, but it really does.īut my major point is this that Adam alludes to: This is of course why a rise in the minimum wage does indeed increase unemployment.
A change in the labour costs changes the trade off between employing labour and employing capital to reach the same production goal. If all that manufacturing were done in the US people would be being paid $2,000 to $3,000 a month for the job: but there would be many fewer of them and many more machines. They're paid $400 to $500 a month to do so. There's, as we all know, some 250,000 people working at Foxconn to make all that shiny shiny gadgetry. The obviousness of this point is demonstrated by the way in whichĪpple gets its kit manufactured in China.
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