How does the market work and why does it crash? Can’t we just keep the same prices throughout?
In: Economics
In the simplest term, a market is a place where buyers and sellers gather to trade. In a mostly free market, a price is established when a willing seller and willing buyer agree to it for the exchange to happen.
If there are more sellers than buyers, prices generally go down because the buyer can negotiate with many competing sellers. If there are more buyers than sellers, then the price goes up for the opposite reason.
No one “keeps” the same price because the price is established by negotiation and not by a controlling body. If some party, say the government, decides to “keep” prices up, then buyers just don’t buy. If they try to “hold” prices down, then sellers simply don’t sell.
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