Who pay for you coffee?

Why is coffee price high in certain parts of London?
First: maybe there are not many coffee kiosks around in that place and when people are in such a hurry to work, they won't bother spending a couple more dollar for a cup of coffee(they are price-blinded).
Second, these places are "fertile land" for companies because it can be profitable while the physical land is constant, so the supply exceeds demand and thus coffee kiosk has to bid the highest price to get the land and sell coffee, and thus its cost rises. (rent price speciafically)

Different reasons for high rent:
(1) The best land produces very valuable crops relative to the marginal land.
(2) It's worth paying for good land because the alternatives that should be available are not.

Things are expensive either because of real scarcity (more people want it than it is available) or because of artificial means---legislation, regulation or foul play.

Why would improvement in the quality and price of the commuter train services that bring people into New York's Penn Station from the surrounding suburbs please anyone who rents a property in Manhattan? And why might New York landlords be less enthusiastic about such improvement?

Answer: Improved public transportation increases the alternatives to renting a place in the city.

Rent is the return landlords received from their property; profit is the return company owners earn from their property.

Company profits, like rents, are determined by the alternatives. A company with stiff competition will be less profitable than a company with incompetent rivals.


Because of the similarity between the rents that can be charged on land with few substitutes and the profits enjoyed by a firm with few competitors, economists often call those profits "monopoly rents".


Two reasons why a company has a high profit:
(1) That field lacks truly competitors. Only a few companies can provide high quality goods and services.
(2) New companies are prevented from entering the field. Monopoly happens.
So check whether the marginal new company can enter the area freely or not.

Everyday people all around the world are trying to avoid competition or reap the rewards of others who have succeeded in doing so. Economists call this type of behavior "creating rents" and "rent seeking".

The price of a good is the production cost of its marginal producer. Because if the price is higher than the cost, there will be profit, enticing new producers to come in; if the price is lower than the marginal cost, the lowest efficient producer will be squeezed out.