It’s not so much a fallacy as it is a further relationship between prices and supply or demand, called elasticity. A change in prices will produce differing ma

It’s not so much a fallacy as it is a further relationship between prices and supply or demand, called elasticity. A change in prices will produce differing marginal changes in demand for different goods/services, depending on many factors such as whether the good is an essential or a luxury, the availability of substitutes, competition in the marketplace, and others. This relationship is part of the information used when deciding MSRP, so it’s not entirely unexpected that an increase in costs doesn’t translate to an increase in retail price, if profit margins allow it.