1 Sep 2022 4:36 pm
All businesses set their prices according to the law of supply and demand. Prices are ALWAYS set in an effort to maximize profits (or at least they attempt to do so to the best of their abilities). To whatever extent they deviate their prices from that optimum price, whether too high or too low, they are losing money they would otherwise obtain at the optimum price. Producers are not free to raise prices without limit in a competitive market free from monopolization. The costs of production play no role whatsoever in the optimum price setting. The laws of supply and demand always determine the optimum price not the cost of production.ConsRule » 01 Sep 2022, 12:28 pm » wrote: ↑ That assumes every business owner, that is so unethical they are willing to commit a crime, passes the labor savings on the their customer in the form of lower prices.
Do you really not see the flaw in that logic?
I have long been an advocate of coming down hard on any business that uses illegal labor. The laws need to be much harsher than they are, the fines need to be much larger and should be levied against the company and the CEO/Owner jointly and severally...along with the employee being deported to their country of origin within 24 hours.
The cost of production comes into play when businesses decide what and how much to produce. If the market forces dictate an optimum price level below the cost of production the business is still forced to set the price of their goods at the optimum market price. They will just lose money as a penalty for investing limited capital where it would be better invested elsewhere. This ensures producers watch their expenditures closely and make wise choices in production, saving the nation (and the business\investors) the cost resulting from wasting scarce labor and raw material resources.