CTRebbe,
1. the concept of supply and demand was not invented here on the CR. Basic Eco101. It makes a lot of sense- it explains why the price of tomatoes goes up if the tomato crop was affected by bad weather, why oil prices go down when OPEC releases more oil reserves, and why the US govt buys up surplus wheat to save farmers from plunging wheat prices. The question is whether it applies here.
2. Volume: If they are making fewer hats, then they are making less money, and perhaps the business will no longer be viable. Unless they mark up the hats so they can provide their product to the fewer costumers who want them. That’s the concept of volume: if you sell a large volume of any item, you can sell it for less and still make a profit. That’s why bigger supermarket chains can charge less for the same item sold in a Mom&Pop’s minimarket.
3. Quality: Keep in mind, that unlike a lot of clothing, hats are not mass produced in China where they can be made cheaply and therefore sold cheaply in places like Walmart. Hat making is a skill, much of it done by hand. Here’s a line from Borsalino’s website: “The uniqueness of the Borsalino product lies in its production process: made of fine fur felt (rabbit or hare) it passes through around fifty production phases and it takes an average of seven weeks’ work to finish every hat.” I imagine wool hats are cheaper than hats made from fur, imitation felt cheaper than fur felt.
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