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No. When people say “the price is set by supply and demand,” they mean that the price and quantity of produced goods are set at the intersection of the supply a
by tshaddox 2y ago
No. When people say “the price is set by supply and demand,” they mean that the price and quantity of produced goods are set at the intersection of the supply and demand curves. As the linked article in the parent comment shows, a firm with market power will maximize profit by producing goods with a different price and quantity, but they will still use the supply and demand curves to calculate how to maximize profit.
- fsckboy 2y agoprice and quantity are always at the intersection of supply and demand, by definition. no doubt you can find things to quibble with this too, but it's more accurate to say "price is set by supply and demand" means that the quantity sold is at the "market clearing price". Any other price will leave unsold inventory or unmet demand. the point being that market manipulations will shift the supply or perhaps the demand curves.
- JumpCrisscross 2y ago> Any other price will leave unsold inventory or unmet demand Monopoly pricing leaves unmet demand in favour of higher expected profits.