Sigh.....Look what I found at one of my stores....

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Edumacate me daddy, instead of just telling me I'm wrong.

So the cheaper something is, the more people want it, but the less productive it is for the companies to make it.

So if the price drops, then consumers want it more. Consumers will usually flock to the best deal they can find, which means competitors will have to drop the prices to match. Now, with a market flooded with cheaper products, people will eventually have so much of that product that they won't need it anymore unless they can get it for cheaper than they already can, because it's not worth it for them. This means that companies will have to sell the product for even cheaper to get rid of their huge excess supply of the product, which means that the producers of the product will stop making so much of it, because nobody wants it anymore and people are losing money.

If the price drops consumers will want it more? Wut. Consumers do not just buy things because something is cheap, they buy something because they want and/or need it - not because its cheap. I don't enjoy wine or alcohol much at all for that matter, it doesn't matter how cheap it gets it isn't going to incentivize me to buy it. The only people that can afford to buy more of something they don't need unless its cheaper is like 1-10% of the population.

Now yes as you pointed out consumers will flock to the best deal they can find. Which begs the question why don't grocery stores lower the price of their products to the absolute minimum? Well actually they do. Now there are two kinds of grocery stores, mom & pop stores and franchise/chains. Both types of stores compete with eachother the biggest difference is that mom & pop stores are generally less efficient, have more waste and of course they can't buy in large bulk (no buying $100,000 of beef over 6mo isn't bulk, bulk is buying $10,000,000 of beef over 3mo (or whatever)). And chain stores while usually much more efficient in every aspect have to pay shareholders / franchise fees (which go to shareholders).

And honestly to insinuate that if stores lowered prices too much they couldn't afford to pay their min. wage employees is completely laughable. I was an assistant manager at 4 million dollar hardees and our labor target was about 23% of our daily sales. So if we did 13,000 in sales we wanted labor to be at about $2990 give or take (guesstimating) and our avg labor hour was like 13.50ish since we hired at $12 an hour. Which means that our hours for the day would sit at 200ish (221.4 in this case). Our avg meal cost was about $14 usually if I recall correctly which means we would do 968 transactions roughly. So if we wanted to give every employee a dollar raise we would do $1 x 221 = $221 + 2,990 = $3,191. To cover this cost over 968 transactions we would need to increase the avg transaction by $.22. Meaning they buy 3 items, a sandwhich, drink and fries we'd need to increase the cost of each by about $.0733. Realistically you'd probably see a $.06 increase across the board. Consumers wouldn't even notice this. An entire dollar raise though would be huge! But you say, what about labor, how big of a % increase is it? Less than 1% infact it'd be a .7% increase in labor costs. So why don't they do this? Because they'd rather give that .7% increase to their CEOs and shareholders.

Think about it, if your corporation does $100,000,000 in sales you know that $23,000,000 of it is going to employees, to increase that 'cost' by .7% would mean you lose out on $700,000 that could be yours in a nice fat bonus. What incentive do you have to do it? So long as employees take the 23% of the pie you've assigned them, no reason to increase that %. Right? But heres the problem with this, people at the bottom spend most of the wealth in this country, they are the creators of wealth. If every store increases their pay by $1.00 when it was previously $12.00 lets say, you've effectively increased the amount of wealth flowing by 8.5% (roughly). This means that everyone has more money, this means that $.06 increase to your prices will easily be replenished.

Now there are more nuances to this, for instance lets say nurses make $13.00 an hour but now every min. wage worker makes $13.00 an hour, why should a nurse stay a nurse when they go be a burger flipper for the same $$? Good point, thus we have an increase in prices to cover this. But again, it would be pennies increase in the actual cost. The ACTUAL problem lies in the fact that the super rich, the ceos, shareholders, tycoons, etc. etc. have decided they only want to 'surrender' X% to employees. Meaning that for fast food workers they only want to give them 23% of the labor costs. So instead of increasing prices by pennies they would increase them by quarters or more depending on how many interactions a product has with laborers (fast food workers, truck drivers, food processing plants, etc). This is why unions are so important because they represent the workers and will fight for increased wages proportionate to sales rather than a set % the ceos/shareholders have decided to allot to their employees.