Supply and demand can both be impacted by perception, which can be tweaked by humans.
If tariffs increase the wholesale cost of an item by $1, but you can make consumers think $5 retail is what the increase should be, that’s an extra $4 in your pocket.
Economics education doesn’t stop at 101 for a good reason. “Supply and demand” is like “veins carry deoxygenated blood” - it’s largely true, but further learning reveals complexity.
Yes. If people are unwilling to pay $5 more, they will buy less or buy none. That decreases profits due to decreased demand. Now there is more supply than demand, which means you need to make the purchase more attractive, which generally means spend more on advertisements/rebates, lowering the price to an acceptable rate or improve the product value. Or strike a balance where you shrink both the cost (size), and price, and advertise the cheaper price to make people think they are getting a better deal when they are really just buying less for the same price (or more). Round and round it goes; supply, demand, and misleading.
People should remember that it isn’t just the corporations who raise the price that are at fault, it is the people who are unwilling to go without it when the price is overinflated. Yes, then we nit-pick into things like medical necessity and … thus back to the point that it is both supply and demand, and not.
It's not a pity. It's a valuable tool to understand behavior as it relates to supply and demand.
Supply and demand isn't the only thing that exists, but basically everything else feeds into and informs it. It isn't the only starting position, but you can reach basically any point from it.
If tariffs increase the wholesale cost of an item by $1, but you can make consumers think $5 retail is what the increase should be, that’s an extra $4 in your pocket.
Economics education doesn’t stop at 101 for a good reason. “Supply and demand” is like “veins carry deoxygenated blood” - it’s largely true, but further learning reveals complexity.