Re:Analysis finds Australia’s inflation being driven by comp...
by MrVandemar on Saturday February 25, 2023 @02:45AM
(#34934765)
> refuse to buy
Few do this. Television tells them they want things, and they'll get angry if they can't have them. So they put it on their credit-cards and kick the can down the road.
Firms don't charge a 'market price'. They put a mark up on costs and sell as much as they can at that price.
In other words marginal productivity theory is nonsense.
When you do that, and you get a supply crunch as we have now, then prices will go up as we are seeing.
It's fairly obvious. I will try to sell my stuff for the highest price I can get for it. Your only choice as a buyer is to go somewhere else, or refuse to buy.
Prices are controlled by excess capacity to supply. When that capacity vanishes, particularly amongst needed goods and services, you get price gouging.
It's similar to overstretching a spring. We have damaged the supply side and it won't go back to its prior path.