<p>At the time period in which you buy the new retail goods, the cost of having bought the old inventory goods is now a sunk cost. Your pricing decision I don't think should be based on the price of the old inventory. The new point where marginal cost equals marginal benefit (assuming competitiveness) is now the price of the new stock (more expensive).</p>

<p>Without competition though, the result will probably change, since the quantity you supply will now matter in affecting demand.</p>

CC BY-SA 3.0
2016-06-02T20:18:06.380Z
2016-06-02T20:27:23.263Z
2016-06-02T20:27:23.263Z
Kitsune Cavalry
<p>If you are a retailer, and the price you pay for one of your retail goods goes up, how do you price the inventory you already had (which you paid a lower price for)?</p>

<p>Here is an example of a TFD (True, False, Debatable) type question for this idea:</p>

<p>Suppose you run a hardware store, and the price you pay for sidewalk de-icer increases. You raise the price on the remaining stock of sidewalk de-icer in your store, for which you paid a lower price.</p>

<p>I think the answer to this question is false. Increasing your price on the inventory you already had violates the PMP, so any other price would lower profits. </p>

CC BY-SA 3.0
2016-06-02T19:59:14.747Z
In practice, gas stations tend to increase their prices immediately in response to an increase in the price of oil, and only slowly decrease their prices in response to a fall, but the extent to which this is true is affected by local competition: https://www.stlouisfed.org/Publications/Regional-Economist/October-2014/Rockets-and-Feathers-Why-Dont-Gasoline-Prices-Always-Move-in-Sync-with-Oil-Prices
dismalscience
<microeconomics><producer-theory>
Retailer Price Setting for Existing Inventory in the Event of an Increase in Price Paid for the Good
DornerA
# Retailer Price Setting for Existing Inventory in the Event of an Increase in Price Paid for the Good

(Asked by: username_0 on 2016-06-02)

If you are a retailer, and the price you pay for one of your retail goods goes up, how do you price the inventory you already had (which you paid a lower price for)?

Here is an example of a TFD (True, False, Debatable) type question for this idea:

Suppose you run a hardware store, and the price you pay for sidewalk de-icer increases. You raise the price on the remaining stock of sidewalk de-icer in your store, for which you paid a lower price.

I think the answer to this question is false. Increasing your price on the inventory you already had violates the PMP, so any other price would lower profits.

**Tags:** microeconomics, producer-theory

> **Comments:**
> **username_1**: In practice, gas stations tend to increase their prices immediately in response to an increase in the price of oil, and only slowly decrease their prices in response to a fall, but the extent to which this is true is affected by local competition: https://www.stlouisfed.org/Publications/Regional-Economist/October-2014/Rockets-and-Feathers-Why-Dont-Gasoline-Prices-Always-Move-in-Sync-with-Oil-Prices  

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## 1 answers

### Answer by username_2 on 2016-06-02. Score: 1

At the time period in which you buy the new retail goods, the cost of having bought the old inventory goods is now a sunk cost. Your pricing decision I don't think should be based on the price of the old inventory. The new point where marginal cost equals marginal benefit (assuming competitiveness) is now the price of the new stock (more expensive).

Without competition though, the result will probably change, since the quantity you supply will now matter in affecting demand.


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