Why is it that in economics, when demand is greater than supply, prices “automatically” go up? Isn’t it sellers that decide to raise prices because buyers are willing to pay more? Couldn’t sellers choose to not raise prices?

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Why is it that in economics, when demand is greater than supply, prices “automatically” go up? Isn’t it sellers that decide to raise prices because buyers are willing to pay more? Couldn’t sellers choose to not raise prices?

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Anonymous 0 Comments

You could very well try, but the market will make the correction without you. Take a look at what happened with the PS5. Supply was short but Sony didn’t raise the price. What you had happen was people buying at the store for below “retail price” and selling for “market price” which was a lot higher. So the market functioned exactly as expected, correcting itself.

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