economics 101:
I went to Target today and bought a steel folding chair for $10 and a cotton sweatshirt for $20.
This seems really baffling and counterintuitive - how can a sweatshirt made out of maybe one pound of woven cotton cost twice as much as a chair made of seven or eight pounds of steel?
Then you consider the labor costs of manufacturing each item: the sweatshirt is maybe a tiny bit more labor intensive than the chair, since the chair is just created by an automated machine that just punches out shapes, and someone bolts the pieces together, pretty simple, whereas the shirt has to be woven and then pieced together, add a zipper, the elastic waist and wristband parts, etc.
But this still seems confusing, until you look at the prices of steel and cotton. Cotton actually costs considerably more than steel. On the commodities exchange that I was able to find online, the price of cotton fluctuates, but is currently down around a $1/pound, whereas steel is at a constant of $800/metric ton, which comes out to less than 36 cents/pound. So if you figure that there’s maybe a slightly larger labor cost per item for the sweatshirt than for the chair, this actually kind of balances out to making sense, I think.
Very counterintuitive, though.
