What's the Point?

At what point is a price too high? I read a NYT’s piece within the past few weeks that talked about the $40 entrée and how it was becoming more common in restaurants where you go in jeans, bring your kids. That’s no wine, appetizer or salad or tip. Yikes.

Recently, more things have crossed over the line for me. If you knew what they were, you might say: Ah, these are items you can afford. You might go on: All prices go up over time; inflation. Both statements are probably true, but that doesn’t change the conclusion I reach: some things are now priced too high.

As my economist friends tell me, it’s all about price elasticity:

The higher the price elasticity, the more sensitive consumers are to price changes. A very high price elasticity suggests that when the price of a good goes up, consumers will buy a great deal less of it and when the price of that good goes down, consumers will buy a great deal more. A very low price elasticity implies just the opposite, that changes in price have little influence on demand. http://economics.about.com/cs/micfrohelp/a/priceelasticity.htm

For the vendor, it’s a matter of price elasticity. For me, it’s whether I buy or not. For more and more stuff these days, I am more price sensitive. You?