It doesn’t make sense to me. I used to be all like but then everything increases in price still Yada yada. But recently… why can’t we just lower the prices of petrol artificially. Why can’t we just lower housing prices by law?? Why can’t we erase inflation seeing as it’s completely made up anyway.
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At a basic level, the price people are willing to pay for goods and services is determined by supply and demand, and in some ways this could be considered an arbitrary value.
All things, however, have a price floor based on the actual cost to produce something and in this sense all prices are interconnected; when the price of oil goes up, for example, everyone who uses oil in the production or distribution of their product will see an increase in their own costs.
These costs can’t be absorbed by the producer forever and will at some need to be passed on to the consumer otherwise the business will go bankrupt.
Price controls are a mechanism that some governments use to control inflation of certain products, but the costs need to be carried somewhere, so if this isn’t by the consumer it must be the government, otherwise producers will go under and the economy will collapse.
Many goods are bought and sold on international markets so governments have limited control of these prices, the choice is either to buy at an agreeable price, to buy elsewhere, or not to buy at all.
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