As you all know Inflation is touching
new highs every now and then - here's a logic to beat that!! It may
work if we collectively bargain for it. Read this story and the idea
behind it.
A man eats two eggs each morning for breakfast. When he goes to the
Kirana store he pays Rs. 12 a dozen. Since a dozen eggs won't last a
week he normally buys two dozens at a time. One day while buying
eggs he notices that the price has risen to Rs. 16. The next time he
buys groceries, eggs are Rs. 22 a dozen.
When asked to explain the price of eggs the store owner says, "The
price has gone up and I have to raise my price accordingly". This
store buys 100 dozen eggs a day. He checked around for a better
price and all the distributors have raised their prices. The
distributors have begun to buy from the huge egg farms. The small
egg farms have been driven out of business. The huge egg farms sell
100,000 dozen eggs a day to distributors. With no competition, they
can set the price as they see fit. The distributors then have to
raise their prices to the grocery stores. And on and on and on.
As the man kept buying eggs the price kept going up. He saw the big
egg trucks delivering 100 dozen eggs each day. Nothing changed
there. He checked out the huge egg farms and found they were selling
100,000 dozen eggs to the distributors daily. Nothing had changed
but the price of eggs.
Then week before Christmas the price of eggs shot up to Rs. 40 a
dozen. Again he asked the grocery owner why and was told, "Cakes and
baking for the holiday". The huge egg farmers know there will be a
lot of baking going on and more eggs will be used. Hence, the price
of eggs goes up. Expect the same thing at New year, Diwali and other
times when family cooking, baking, etc. happen.
This pattern continues until the price of eggs is Rs. 60 a dozen.
The man says, " There must be something we can do about the price of
eggs".
He starts talking to all the people in his town and they decide to
stop buying eggs. This didn't work because everyone needed eggs.
Finally, the man suggested only buying what you need. He ate 2 eggs
a day. On the way home from work he would stop at the grocery and
buy two eggs. Everyone in town started buying 2 or 3 eggs a day.
The grocery store owner began complaining that he had too many eggs
in his cooler. He told the distributor that he didn't need any eggs.
Maybe wouldn't need any all week.
The distributor had eggs piling up at his warehouse. He told the
huge egg farms that he didn't have any room for eggs would not need
any for at least two weeks.
At the egg farm, the chickens just kept on laying eggs. To relieve
the pressure, the huge egg farm told the distributor that they could
buy the eggs at a lower price.
The distributor said, " I don't have the room for the eggs even if
they were free". The distributor told the grocery store owner that
he would lower the price of the eggs if the store would start buying
again.
The grocery store owner said, "I don't have room for more eggs. The
customers are only buying 2 or 3 eggs at a time. Now if you were to
drop the price of eggs back down to the original price, the
customers
would start buying by the dozen again".
The distributors sent that proposal to the huge egg farmers but the
egg farmers liked the price they were getting for their eggs but,
those chickens just kept on laying. Finally, the egg farmers lowered
the
price of their eggs. But only a few paisa.
The customers still bought 2 or 3 eggs at a time. They said, "when
the price of eggs gets down to where it was before, we will start
buying by the dozen."
Slowly the price of eggs started dropping. The distributors had to
slash their prices to make room for the eggs coming from the egg
farmers.
The egg farmers cut their prices because the distributors wouldn't
buy at a higher price than they were selling eggs for. Anyway, they
had full warehouses and wouldn't need eggs for quite a while.
And those chickens kept on laying.
Eventually, the egg farmers cut their prices because they were
throwing away eggs they couldn't sell.
The distributors started buying again because the eggs were priced
to where the stores could afford to sell them at the lower price.
And the customers starting buying by the dozen again.
Now, transpose this analogy to the gasoline industry.
What if everyone only bought Rs 200.00 worth of Petrol each time
they pulled to the pump? The dealer's tanks would stay semi full all
the time. The dealers wouldn't have room for the gas coming from the
huge tanks. The tank farms wouldn't have room for the petrol coming
from the refining plants. And the refining plants wouldn't have room
for the oil being off loaded from the huge tankers coming from the
oil fiends.
Just Rs 200.00 each time you buy gas. Don't fill up the tank of your
car. You may have to stop for gas twice a week, but the price should
come down.
Think about it.
Also, don't buy anything else at the fuel station; don't give them
any more of your hard earned money than what you spend on gas, until
the prices come down..."
...just think of this concept for a while.
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