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January 31, 2013, 07:10 PM   #67
Brian Pfleuger
Moderator Emeritus

Join Date: June 25, 2008
Posts: 19,100
Quote:
 Originally Posted by DNS That is an interesting concept. So nobody is gouging. The buyers are demanding to pay more money? The problem is that the buyers are forcing sellers to increase prices? No. Sellers set the price, that is why I can't get free stuff. No, sellers would not be in business if buyers could set the price and make them give stuff away for free, LOL, but that would happen if buyers set prices. We are, after all, talking about individual sellers who are gouging and so too then we are talking about individual buyers who are paying the gouged prices.

No.

The seller sets an asking price:

Seller: I will sell you this magazine for \$5.

Seller (to self): Hm, maybe \$10 would work?

Next buyer: OK, I'll pay \$10

Seller #2 (to self): #1 is getting \$10, I bet I can get \$15

Buyer: Hm, #1 has them for \$10, #2 has them for \$15... Hey #1, I'd like one, thank you.

#2 (to self): Darn, no one will pay \$15. I'll charge \$9.

Seller #1 is still at \$10. That's his ASKING price. He can't sell them anymore... the buyer has set the price lower. The seller has two choices. Lower his asking price or not sell.

Who set the selling price? The buyer.

If the seller has to spend \$5 to produce the widget that the buyer will only pay \$4.50 to buy, will the seller be in business?
No.

If the seller can produce the widget for \$5 and the buyer(s) will pay \$1,000, guess what happens?
More sellers!

What ELSE happens? The new sellers ASK FOR LESS! If the SELLERS set the SELLING price, what would happen?
The original seller would still be getting \$1,000 while everybody else gets \$900. Why would the first seller lower his price if he was in control? Why would the new sellers sell for less if THEY were in control? The new sellers can't control the buyers and they want their business, so they entice them by OFFERING a lower price.

But the seller DOESN'T set the SELLING price. He ASKS for a certain amount but the BUYER sets the SELLING price. If the buyer won't buy, there is no SALE. The seller has NO control.

New sellers want a part of the market, so they appeal to the buyer by OFFERING the same item for less money. Do they WANT to sell it for less money? NO! They only do it because SELLING it for less is BETTER than NOT SELLING it for more!