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<p>[QUOTE=&quot;Neal, post: 3215062, member: 43872&quot;]One of the PO&#039;s problems is the changing elasticity of demand for their services.&nbsp; Demand is said to be inelastic if the consumer has few options but to buy the product regardless of price.&nbsp; It can be defined by the fact that revenue increases as the price increases.&nbsp; Demand is said to be elastic if the consumer has other options, either to buy a substitute, use a competitor, or do without.&nbsp; It can be defined by the fact that revenue actually decreases as the price increases.&nbsp; In bygone decades the PO had a monopoly on an essential service (first class mail) so the demand was inelastic.&nbsp; They could charge what the politicians would allow.&nbsp; Now most of what once was first class mail is electronic, and package delivery has sprouted more competition.&nbsp; If they raise the price of first class they may find in the long run their revenue will fall, or at least not rise much (there is some element of inelasticity in a hard core of people who must mail letters) as more customers decide to use other options.&nbsp; Yet their required service costs will continue to rise.</p><p><br /></p><p>Actually, I really like the USPS.&nbsp; Here in my small town we get excellent, friendly service at a very reasonable price. Consider when I was a teenager the cost of an ounce first class was 5 cents, and an extra 5 cents for each additional ounce.&nbsp; The general inflation rate since the early 1960s would make that in the neighborhood of $.60 to $.70 today.&nbsp; (Gold was $35 an ounce; an uncirculated 1909-S VDB could be bought for around $100).&nbsp; So the price of a stamp is still a bargain, historically.[/QUOTE]</p><p><br /></p>

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