It's actually not that simple, and strangely one of those areas where economics has had a blind spot for a long time. Lots of businesses use cost-plus pricing,

It's actually not that simple, and strangely one of those areas where economics has had a blind spot for a long time. Lots of businesses use cost-plus pricing, which contradicts the econ 101 assumption that you're repeating. Now, one might naively argue that even with cost-plus pricing, the outcome is still the same because businesses who set their price too high will be either outcompeted or just find no demand either way and disappear from the market. However, this assumes that the buyer-side utility functions and price expectations are somehow exogenous, and come from outside the entire market system. But that's obviously not true: people form their expectations of how much things are supposed to cost, and even what the value of goods are (see Giffen goods for an extreme case) by looking at the de facto prices of goods -- and those are usually set by the suppliers, using cost-plus pricing. The bottom line is that utility functions and price expectations are really endogenous, which radically breaks the econ 101 model of supply and demand. I've heard of economists making various attempts to fix their models to account for this, but I'm not aware that a consensus on how to fix this has emerged.