> This is correct in almost all cases (outside of highly commoditized goods) and it's crazy how people don't understand it.
What are you on about? Of course McD will change prices relative to input expenditure. You can even see this across all the countries they serve. If there were to be a significant impact on margin, they can increase prices.
All fees are passed onto customers, that’s how you calculate profit margins.
Most business only absorb the minimum amount of margin loss they can, and for very short terms. No business aims to operate at a loss unless propped up by outside investments.
All businesses will increase prices to maintain the profits they need, up until what the market will bear - which is why taxes will also not end up pushing it too far, the gov isn’t stupid.
Again, it depends on elasticities. Businesses can't just raise prices and expect demand to remain at old levels. People quickly substitute goods and services in the face of price changes. In the case of mcdonalds price increases cause people to cook or eat food that doesn't need to be prepared. In the case of rent, supply is fixed, so landlords are already charging monopoly prices. There is very close to zero wiggle room for landlords to raise prices.
> This is disproved very easily by reality - most places have increasing rent YoY. Same goes for house prices.
All this proves is that evolving market conditions lead to changes in price. Try charging 2030's market-rate rent in 2021, and see how many offers you get.
What are you on about? Of course McD will change prices relative to input expenditure. You can even see this across all the countries they serve. If there were to be a significant impact on margin, they can increase prices.
All fees are passed onto customers, that’s how you calculate profit margins.