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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> Isn’t it sellers that decide to raise prices because buyers are willing to pay more?
Incorrect. Sellers do not determine a price. The market determines the price.
Simple example, say Ford said it was selling all it’s trucks for $1. Everyone would want to buy one of these $ trucks. But there aren’t enough trucks to go around, so some of the buyers say “well, I’ll pay you $2 for the truck!” This flushes out some of the buyers who can’t afford the extra dollar, but there still are not enough trucks to satisfy demand, so some of the buyers go “well, I’ll pay you $3 for the truck!” and this flushes out some of the buyers who can’t afford the extra dollar, and so on and so on until the market settles at the fair market price for a truck.
Sellers have some wiggle room in there, but they do not determine prices in a vacuum. If you artificially made prices low you just end up with hoarding an shortages and illicit black markets
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