Most expensive living conditions

The most interesting thing about the top ten most expensive U.S. cities to live in is not that I’ve lived in two of them, but that I wouldn’t live in three. Why? Because they’re in ALASKA. Why would a place so undesirably cold and so painfully remote demand such an investment? Someone with a better-than-remedial economics background lay it down for me.

8 thoughts on “Most expensive living conditions

  1. I’m no economics expert, but I would assume that the AK towns are so pricey because they are so painfully remote – I would assume that most necessities would need to be imported. Just as a location such as Bermuda is so pricey.

    But I’m just guessing here.

  2. It can easily be explained by a simple rule of economics: The balance of production and demand, so…at the moment the production is very low…the demand will be very high. With the time, when the population will be bigger there, and more companies will enter the market we will see how it will become less expensive to live in that cities. But…sadly with time we encounter a reverse reaction…like that in New York, where it is most expensive to live in, althought it wasn’t like that in th epast…

  3. Ahh, so since the supply is very low, our lines are crossing at where the demand is very high. I guess I just figured that real estate was more liquid than it really is.. but construction companies must be scarce up there. By my logic, every place in the world should be the same cost, which obviously isn’t true.

  4. This is a guess too, but I suspect the whole ecoonomy is inflated. Everyone probably makes more than they would in somewhere like Wyoming.

    Careershop.com indicates this might be correct, the median acct clerk salary in Fairbanks AK is a little over 32K and the national average is a bit under 26K

    Nantucket, MA is a good example. The grocery store pays kids about double minimum wage to bag groceries.

  5. This question can be explained NOT by the basics of supply and demand but by the principle of marginalism applicable to the principle of supply and demand. The marginal value (i.e. an additional unit) of desirable items in Alaska such as life comforting consumables is high precisely because of the harsh living conditions in Alaska and therefore the demand for it is high. The marginal cost of supply that additional unit of life comforting item is also high because of its harsh living conditions (i.e. high distribution costs) and the supply is low. Putting these two together, it can be graphed as a shift in both the supply (upward) and the demand (outward) lines along an imagined perpendicular line (to the X axis representing quantity) that joints the equilibrium points of 2 sets of supply and demand lines. The second set is the set of shifted lines described earlier and the first set can be thought of as a comparative set of demand and supply lines of the same item in a more desirable location as far as living conditions are concerned. The end result of this graphing is that the quantity demanded is unchanged but the equilibrium price is now higher.

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