John Perich wrote: "Why do you assume the cost of bathroom maintenance isn't already included in the price charged?"
I hadn't thought about it. I guess I had assumed, perhaps incorrectly, that bathroom maintenance costs would be idependent of the prices charged for goods at the establishment. Thus bathroom maintenance costs would not bear on optimizing decisions, in much the same way that lump-sum taxes are non-disortionary. On reflection it has occured to me that prices may affect bathroom maintenance costs: if Mc.D's charges less for burgers and obtains more customers, then they may have more bathroom use which may require more bathroom cleaning, i.e. an increase in bathroom maintenance costs. If such were the case (it seems reasonable), then maintenance costs would enter into the profit max. problem and would therefore affect the price, right? That's not a rhetorical question; if I'm wrong please tell me. Well--I think that was what I was thinking anyway: that bathroom use would be independent of the price. Of course Michael Etchison may be right as well (if I read him correctly), in that firms engage in hueristic pricing and just toss bathroom maintenance into the mix. (If I read you wrong, Mr. Etchison, I apologize for that.) That possibility just never crossed my mind. -jsh ===== "...for no one admits that he incurs an obligation to another merely because that other has done him no wrong." -Machiavelli, Discourses on Livy, Discourse 16. __________________________________________________ Do You Yahoo!? Yahoo! - Official partner of 2002 FIFA World Cup http://fifaworldcup.yahoo.com
