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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You can make 100 cakes per day, sell each at $10, there are 200 people every day willing to buy a cake at $10, so you sell 100 cakes every day make $1,000 each day.
Now out of that 200 people that want cake, 100 of them are willing to buy a cake at $20. You still make 100 cakes per day, but if you sell each at $20, you can still sell 100 cakes every day, but now make $2,000 each day.
Would you choose to not raise the price?
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