Why do things cost so much in a big city?

Question

Shouldn't costs be lower in a really small town due to lack of excess supply/competitors for things like food, clothes, living expenses, etc?

Answer 1

In a big city things cost more because there's more demand for products. Costs are generally lower in small towns because demand is lower.

Answer 2

here in NYC, rent is very high (but some of that is offset by not having to have a car, paying for gas, insurance, etc.), and taxes are high, but i find food and clothing only marginally higher, if even, than in a small town.

i don't think a small town retailer has much incentive to sell things too cheaply if there is little competition and a captive clientele.

in a big city you can frequently find the lowest prices for many items simply because of fierce competition and large turnover.

what NYC, as just one example, offers is the widest variety of goods from all over the world at a wide range of prices. sometimes a high price is the cost (or benefit) of such variety, which in a small town i could not ever get at *any* price.

Answer 3

Rent in a big city is very expensive, and that is added to the costs. Also, because the rent is so high, businesses can't afford large storage areas, so they can't by stock in quantities as large as they otherwise might do, thus stopping them from some discounts and making shipping more expensive. People don't like to travel in a big city, they want to buy from someplace very close, so they pay more for the convenience.

Answer 4

You're thinking along the right lines, i.e. supply and demand, but the thing is that when you have so many people concentrated into such a small area the demand for many goods and services is exponentially greater than in rural areas.

Answer 5

supply and demand, duh.

The size of the market has no bearing on whether or not there is excess or insuffcent supply; small and large markets are just as likely to have either. In any market, a shrtage of supply will tend to bring in new suppliers, and an excess of supply will drive out suppliers.

Generally, higher wage jobs are in larger markets, which drives higher demand, as demand is a function of a buyer's willingness and ability to pay a certain price. You'll find more rich people, who are willing and able to pay higher prices in New York City or Los Angeles than you will in Centerville, Iowa.

Answer 6

I live in a small town and it's a lot more expensive to live here than in an urban city.

Answer 7

To explain it simply--it's supply and demand. The big city has a much larger concentration of people who are seeking our services and products. Because of the larger demand, they are willing to pay more for it and in turn providers CAN charge more for it.

Answer 8

Standard of Living.

Answer 9

Economics 101 -- the law of Supply and Demand.

Answer 10

Products are cheaper in a big city because of "THE ECONOMY OF SCALE".

Services are more expensive in big cities, because of 'COST OF LIVING'.