Stickiness

Economic concept of the day.

 

Stickiness

 

As it applies to prices this means that sellers and buyers of certain goods are reluctant to change the price despite changes in input costs or demand patterns.

 

Price stickiness often manifests in one direction. For instance, prices will rise far more easier than they will fall.

 

I have yet to meet a single individual that has altered their automobile use as a consequence of higher gas/diesel prices.

 

As soon as energy companies and producers (read: Exxon, the Saudis, et al) figure out consumer demand remains unchanged at a higher price point they are loathe to increase production (supply). The result is record profits. Who can blame them? It's exactly what I would do.

 

Stickiness also applies to wages. When sales go south, business typically do not reduce wages. They may resort to layoffs, but wages are generally sticky.

 

Just doing my small capitalist part to drain the social media cesspool of lazy economic thought.