>(Yes, I know, the Austrians on the list would kill me for assuming cost dictates price, rather than the other way around. But it's just awkward to state it the right way. :) )<
This Austrian has no difficulty with that way of putting it _in the context of this discussion_. What we are talking about is the price which appear on the restaurant menu. The owner manifestly looks at, and takes seriously, his costs when he sets them, and, generally speaking, intends to set prices which will in fact maximize his net revenues (as modified by other, non-price, considerations). How his suppliers set their costs is of no great immediate interest to him. But to his suppliers, what he is willing and able consistently to pay matters a great deal, and their prices to him take that into effect. When he, and his peers, slack off their buying, then that tends to lower the prices which the suppliers are able to charge. That is why Austrians insist that in the long run, looking at the system as a whole, prices do tend to have a strong effect on "costs" -- because one guy's costs are another's prices. But in the short run and narrow view, costs (and expected net revenues at different costs -- and, consequently different prices charged by the restaurant) indeed have a strong effect on prices. So you have a wholly unofficial and worth what you paid for it imprimatur to write as you did. About the short run and narrow view <g>. Michael Michael E. Etchison Texas Wholesale Power Report MLE Consulting www.mleconsulting.com 1423 Jackson Road Kerrville, TX 78028 (830) 895-4005
