Saturday, July 16, 2011

Why isn't the marketplace set up for ultra luxury services to be more expensive?

I don't think that butlers will earn only $10-20 per hr. You might be right about cleaners, maids and cleaning services.The question is why the wage rate is different between mechanic and maid.You might list more, the doctor and the nurses, the chef and the cleaner etc. As a rule, it will be determine by the value of marginal product. The price multiplier by marginal product is higher in the case of auto mechanic. Moreover,it will depend on the elasticity of demand and the market structure. Inelastic demand will earn higher wage. A monopolist will earn even more.If he is the only auto mechanic in town,how much will he charge you?

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