#marginal cost

[economicsresearch]

page 430 - mood

[eaglesnick]

“People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” -   Adam Smith

We live in a capitalist society where “market forces” are supposed to dictate prices. In a competitive market, many buyers and sellers interact, leading to efficient price setting. Traditionally price setting was determined by the cost of production – the price of raw materials, labour, distribution etc – plus a  little extra to ensure a reasonable profit.

Since then, we have seen the introduction of “perceived value” whereby price is determined by whatever the customer is willing to pay for a product regardless of production cost. This argument says that if consumers believe a product offers high value they will happily pay a premium price.

Putting the emphasis for pricing on consumer choice is, I believe, misleading. It is companies who set the price, and according to neo-liberal economic theory a corporations duty is to maximise profits for its shareholders, not to provide reasonably priced goods and services for the consumer.

This brings me to my theme, which is the cost of energy in the UK, and one I have visited before. This is a headline just a few days ago:

“BILL BLOW Energy bills to rise for millions of households this spring as price cap hiked to £1,849” (Sun: 25/02/25)

Now, according to nationalgrid.com, just over 43% of the UK’s energy is generated from renewable sources. That means no extra production costs other than upkeep of plant, equipment, wages, future investment, etc

According the   House of Lords Library document, 'Renewable energy:costs’, onshore wind production costs £0.044 per kW,  offshore wind generation costs £0.045 per kW, and solar  generation costs £0.045 per kW. This means the average production cost for these three sources of renewable energy is £0.048 per kW.

The average price charged to the consumer by UK electricity suppliers is 24.5 pence per KW hour. In short, the British consumer pays a price per unit of renewable generated electricity that is 544 times greater than the cost of production.

To be fair, this is not the fault of the suppliers. They buy electricity from the generators, and the generators of electricity operate a FIXED market. There is no competition. Market forces do not determine price. It isn’t even governed by “perceived value". It is determined solely by greed.

This fixed, unfair market, operates on what is known as a “marginal cost" basis. This entirely unnatural set up ensures that the price of ALL electricity reflects the cost of the most EXPENSIVE method of generating electricity to meet demand. As natural gas production of electricity is the most expensive form of generating electricity ALL electricity is sold at this production cost.

It doesn’t matter that over 40% of Britain's electricity is generated through renewable sources at an average cost of £0.048 per kW hour. We are all forced to pay the higher gas generated electricity cost per unit.

Renewable energy costs will NEVER be passed on to the consumer all the time the artificial market of "marginal cost " production is in operation. British electricity prices could tumble tomorrow if true reform of the energy market were to be enforced. Unfortunately, there is no sign from any of the major political parties that this is likely to happen.

[easyshots]

Marginal costing formulas सीमांत लागत सूत्र #breakeven #costing #shorts

[newsoutbursts]

Central Bank of India cuts MCLR by 5 bps across tenors

Central Bank of India cuts MCLR by 5 bps across tenors

MUMBAI: State-run Central Bank of India on Friday said it is reducing its marginal cost of funds based lending rate (MCLR) by 5 basis points across all tenors effective August 15. The bank has revised its one-year MCLR to 7.15 per cent from 7.20 per cent, it said in a release.

Since April 1, 2020, the lender has slashed its benchmark rate by 85 basis points from 8 per cent to 7.15 per cent, the…

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[newsoutbursts]

Central Bank of India cuts MCLR by 5 bps across tenors

Central Bank of India cuts MCLR by 5 bps across tenors

MUMBAI: State-run Central Bank of India on Friday said it is reducing its marginal cost of funds based lending rate (MCLR) by 5 basis points across all tenors effective August 15. The bank has revised its one-year MCLR to 7.15 per cent from 7.20 per cent, it said in a release.

Since April 1, 2020, the lender has slashed its benchmark rate by 85 basis points from 8 per cent to 7.15 per cent, the…

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[darsotadrees]

Economics MCQs (English) 146 to 150 (Cost of Production)

[HDquiz quiz = “213”]

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[solvemyquestion]

Dell Computer Inc. Bought

Dell Computer Inc. Bought

Dell Computer Inc. Bought for $2 Only

Dell Computer Inc. bought $750 of materials from its vendor for a particular order of 5 computers. To deliver this particular order, the Dell driver needs to stop in 5 different places to cover a total distance of 300 miles, the cost per stop is $0.43 and cost per mile is $0.25 since it is using UPS service for delivery. Marginal cost per stop is $0.25,…

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[janaknmistry]

Features and marginal cost in the digital age

Features and marginal cost in the digital age

Good, better and best were the three price points. Organizations had an easy way to distinguish between their various products. Adding more features cost more money, and so the Cadillac cost more than the Chevy. Customers learned to associate more features with more expense with more luxury and exclusivity. And manufacturers were always on the lookout to add a feature that consumers valued more…

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