Earlier quoted context omitted.
This is not how economics works. There are supply curves and there are demand curves, then there is the quantity supplied and quantity demanded. If the demand for a product shifts up (increases) due to basic income, then the quantity demanded increases. Then inventories of that product decrease, indicating that the firms could start producing more and still be able to sell it. They do this, but there costs go up, sin…
> assuming they are producing with increasing marginal costs, which is generally true The norm is marginal production costs decreasing with scale. The usual exception to it is when those costs stay constant. Unitary costs increasing with scale isn't unheard of, but it's also not common in any way.
Re: A Dutch city is giving money away to test the basic income theory
#541Up to a certain point, yes. But, in the short term, firms must increase their production by, say, hiring more workers. They might now have a less optimal worker/capital ratio which would increase their per unit costs. In the long run, their costs are flatter but still could eventually increase with quantity, imagine they're using all the resources locally available and have to start importing from somewhere else, that's going to increase costs.