Peter, one valuable lesson economics lessons I learned from my grandfather was “Always look at how much it’s costing to produce something, eventually someone will have to pay for it.”
Strictly speaking, producer prices aren't the cost of production--the other term that gets used is “factory gate” prices.
Producer prices are the prices at the production end of the distribution pipeline. That is how they are able to function as a predictor of future consumer prices.
Still, your grandfather was spot on. How much something costs is an amount someone will have to pay eventually.
Peter, one valuable lesson economics lessons I learned from my grandfather was “Always look at how much it’s costing to produce something, eventually someone will have to pay for it.”
Strictly speaking, producer prices aren't the cost of production--the other term that gets used is “factory gate” prices.
Producer prices are the prices at the production end of the distribution pipeline. That is how they are able to function as a predictor of future consumer prices.
Still, your grandfather was spot on. How much something costs is an amount someone will have to pay eventually.