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the price of an item is influenced by the time it takes to make because of opportunity cost. To build that item you are giving up you're ability to use the time and resources to build something else.
The price consumers pay for a good is influenced by the price of the resources that go into making it.
How does price of resources effect the consumer price of a good?
The capacity of consumer goods companies across categories to modify prices has been hampered by their inability to predict expenses as a result of variable raw material prices.
Given its spillover effects in a variety of industries, including construction, automotive, and transportation, the nominal price increase of steel, up 167 percent since the turn of the century, is noteworthy. Steel has actually climbed somewhat less than the average among the 13 indexed metals and minerals; copper, for instance, rose by the equivalent of 13% annually. As 60% of copper is used in electrical wiring and cabling, this has implications for the production and transmission of power.
People have been forced to make cuts as household budgets have been pushed as prices for everything from soaps and shampoos to bread and milk have increased by 8 percent to 25 percent in the last year. The Russia-Ukraine war has further hampered supply chain mobility, while major input costs for businesses have increased by 60 to 80 percent, including those for palm, crude oil, and maritime freight.
Global markets that are volatile and unstable have wide-ranging effects on manufacturing companies. Unexpected difficulties are causing supply chains to become unstable and making it harder for firms to be profitable. These difficulties range from rising energy prices to unexpected swings in raw material pricing. With supplies of many raw materials becoming harder to secure, commodity price volatility may not be just a temporary phenomenon, and it is up to manufacturers to either absorb additional costs, find new ways to mitigate the expenses, or pass price increases along to customers who are already reluctant to spend.
Companies who follow the strategy of waiting for processes to return to normal are setting themselves up for failure, whereas those that adapt to changing market conditions become stronger and more successful. Manufacturers must transition from the current linear economy, where they mine, make, consume, and discard, to a more "circular economy," where waste from one industry becomes raw material for another. Used goods, parts, and materials may be kept in use through collaboration with consumers and suppliers, and new business models that rethink ownership can redistribute value throughout such a supply chain. As an illustration, some businesses have even started to develop novel business strategies that allow them to keep ownership of the raw materials required to make the products they sell. By following a systematic approach that focuses attention on resources throughout the value chain, manufacturers can exploit a broader landscape of opportunity than they initially thought possible.
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