... that's the whole point. You want demand to drop, because you don't have the supply to match it. Demand outstripping supply is lost revenue.
People willingly paying for a good means they are happy with the purchase, and just as many people will be happy at the higher price if he's still selling out every week. It's not "ruthless capitalism", it's protecting your supply and communicating the correct value. If prices get high enough, it will attract other people to become honey producers, increasing the supply and making more people happy. By keeping prices low, artificial scarcity is created, which is a harm to consumers.
No: If a producer can't satisfy demand at his/her prices, then that leaves room for a competitor with higher prices to come in. There, artificial scarcity crisis averted.
If someone's buying $20 jars of locally sourced honey they're almost certainly not on welfare.
The idea that any statistical significant number of them is selling drugs is so out of touch with reality (and borderline racist, because it draws from minority stereotypes first and foremost) that it's not even funny.
I've come across plenty of people who receive some sort of public aid (e.g. subsidized housing, SNAP, Medi-Cal) who fall in the aforementioned categories. I don't have the slightest clue how representative they are and I don't really care one way or another.
Whatever interpretations you make of this are yours alone.
Those "luxury items" are not what the huge majority of welfare spending is about, and welfare is not the reason for them (people which make very little without welfare also splurge for similar purchases -- they serve as compensating factors for the lack of means, and even serve to improve their standing among their peers). Human needs are not animal needs, to end with survival.
Here are some starting pointers: http://usuncut.com/politics/6-common-welfare-myths-we-all-ne...
For a start, you have the general "from farm to table" / locally sourced / organic trends that are on the up-stream (this is often are pure marketing, of course).
In honey's case, however, there are many strong additional factors:
- Many stories about fake honey flooding in from unscrupulous producers. There was plenty of stories about that in the United States a few years ago (some exaggerated, but then there's stories like this: http://www.bloomberg.com/news/articles/2013-09-19/how-german...). This in my opinion is actually a legitimate reason to stick local (at least until this can be controlled). Why spend $4.50/lb to get "honey" that might be some potentially adulterated crap where you can go to a local producer, spend $9/lb, and get the genuine deal?
- Greater varieties. Local producers tend to offer quite a bit more variety of honey flavors. Typically stores only offer a few, mostly lighter flavors of honey, with clover dominating the marketplace.
- "Raw foods" movements. There are a lot of claims about raw honey that probably aren't very true, but they probably drive additional demand. I do think there is a slight taste difference at least between unpasteurized / unfiltered honey and its pasteurized, filtered product (the former tending to be a bit richer).
I personally don't see the demand for raw honey being so huge that it's causing that massive of a demand (at least in the US). Elsewise, the price would probably go up more. As it is, the cheapest raw honey (your clovers and orange blossoms etc.) is only roughly twice the price of standard clover honey. A $9 / pound good is not exactly the strongest "luxury good" to make an entitlement rant over. :)
Humans are not homo economicus, and are perfectly capable of feeling unhappy while taking the best option they see, and even being less happy after a voluntary purchase than they were before it. If people feel unhappy after the purchase often enough, some will eventually stop buying the product, and for some of those, no amount of price drop will later convince them to buy again.
Even if there are still enough buyers to buy all of the honey, the loss of goodwill in the community due to the appearance of being willing to extract as much value as possible from each transaction (known colloquially as "gouging") may well raise costs for the honey producer in many other interactions with his community, both financial and other. That goodwill is often worth more to the seller than the maximum additional profit that could be generated by raising the price to the market limit.
A lot of those notions have been debunked for half a century or so in economics papers, but the crude theory is still taught to kids and economics 101 programs for fresh students.
Mindlessly changing prices for the maximum short-term economic benefit isn't always a winning strategy.
Jack up the price 50% and people will find other vendors selling at market prices unless you're selling in a venue that increases perceived value.
Example: Two liters of coke costs $1.29 in my local market. A cold, 20oz coke in the soda machine outside my office is $2.50.
Which is that a price hike can potentially drop demand more than the supply-equilibrium level -- and can even get it to the point you're losing money compared to before despite the higher asking price.
Imagine e.g. the slashback if Arizona (tea) raises their traditional $1 asking price.
Unfortunately, every product has its own curve, and there's no way to know the shape without changing the price and seeing what happens. So knowing that this is possible is not a great argument against raising prices. You won't know until you try it.
That's why I've already mentioned "price elasticity complications" in my first comment -- and gave some examples of how those can play out in real life.
[0] http://daviddfriedman.com/Academic/econ_and_evol_psych/econo...
E.g. (from the paper) the queues at restaurants. Our understanding of Price Elasticity suggests that the optimal arrangement (for both parties) is for restaurants to apply a surcharge in order to reduce queue times. The ubiquity of queues and rarity of surcharges suggests that something beyond Supply & Demand is occurring.
Another example. Areas affected by natural disasters often experience a fuel shortage. The price of gasoline may sell at several times the usual rate. The price hike simply reflects the diminished supply. But customers often behave unreasonably hostile toward the fuel vendors and refuse to buy, even if the purchase is still to their net benefit.
The hostility occurs because the customers feel they're being taken advantage of. Such a sentiment may not be rational in today's global market. But it was a rational response in the ancestral environment (where monopolies and monopsonies were more common) because price hikes set a precedent of exploitation (like how politicians use emergencies as an excuse to pass legislation, which mysteriously stays in effect even after the emergency has passed).
The commentariat may not grok the Evo Psych behind Just Prices. What they do grok is an intuition that a small community might get mad at the local bee-keeper if he hikes his prices out of the blue, Predicted Elasticity be damned.
Checking whether you could make more by raising prices is a bit more difficult. No one is likely to use a coupon that entitles them to pay 10% more for your product. What you could do is start your day with an auction, where larger buyers can bid on your supply, and then you sell off the remainder (if any) afterward. If your unit price should be higher, someone comes along, buys up your entire stock at the auction, and sells it off at a profit after you are sold out.
In terms of honey, you basically pay honey scalpers to reset consumer price expectations for you, then when you raise prices on direct sales, you become the heroic middleman-eliminator, instead of the villainous price-gouger.
Especially on a product like honey that doesn't spoil, a higher than average price during high seasons means you are protecting stock for future low seasons.
I don't know of anything that has an actually demand curve like that. In some cases, increasing price increases demand, as it opens you up to a new market of conspicuous spenders. It does no good to talk such hypotheticals. On the other hand, I have worked a lot in the food service and vending businesses. Missed revenue today is a war chest you won't have to ride out the seasonal fluctuations. How many customers are you going to make happy when you're out of business?