Passport America
Hi: Looking to be doing a lot more traveling next year, and I am considering getting a Passport America card. My intent is to make a decent $ reduction for my average site cost, while still having...
Forum Discussion
horton333 wrote:Yes, Adam Smith was right, demand rises as prices fall. But if you made it to the second lecture of Econ 51 you would have learned that demand can be either "elastic" meaning price is very important to demand or "inelastic" meaning it is not very sensitive to pricing.
How much reducing price increases demand is of course up to debate, but the 'invisible hand' works in mysterious ways and demand will increase with lower price. Can I prove or say how, no but there is hundreds of years of proof when it is measured.
RV sites tend to be relatively inelastic. The pricing of RV sites is generally not the driver of whether or not someone is going to travel in a specific area.
Then you have consider the relationship of pricing to profitability. If a product cost $9.00, you would much rather sell 100 of them at $20 than sell 10 times as many of them at $10 ($1100 gross profit at $20 vs $1000 gross profit at $10) even though your gross revenue would be much greater selling 1000 ($2000 is sales at $20 vs $10,000 in sales at $10). Lower prices that lead more volume and gross revenue are not always in the best interest of a business.
