The op is making reference to the the Supply and Demand model that is supposed to apply on markets [1]: "It concludes that in a competitive market, the unit pr

The op is making reference to the the Supply and Demand model that is supposed to apply on markets [1]: "It concludes that in a competitive market, the unit price for a particular good will vary until it settles at a point where the quantity demanded by consumers (at current price) will equal the quantity supplied by producers (at current price), resulting in an economic equilibrium of price and quantity." Note that the "comptetitive market" bit is important as it implies that the market is fully "free", which almost never happens IRL. Price fixing, strategies, stock market, governments, you name it. There are plenty of ways which make this model too basic in many cases. Worth knowing anyway. That kind of things is best learnt with a grain of salt and some marketing knowledge as well. Read all the posts on "finding the right price" on HN to see how it does not necessarily apply -- but somehow does. [1] http://en.wikipedia.org/wiki/Supply_and_demand http://en.wikipedia.org/wiki/Supply_and_demand