I was wondering if that stuff we spent so much time learning in economics classes is really true. Look at gasoline prices for example. Just because there was a natural disaster along the gulf coast, gasoline prices went up by 20% from $2.50 in a matter of days to $3.00. There was no increase in demand locally, and the supply pipeline couldn’t have been drained in just a few days. And now, a week or so later, the price is back to around $2.50 in the metro Minneapolis/Saint Paul area. Did demand drop? Did supply increase? Or are markets driven by much more than the simple supply and demand graphs that we were forced to endure? Something like fear, or greed, or gullability, or some other force perhaps. Maybe the graphs were just an exercise to make us think that it was really a simple thing; but I think not.
The other thing that puzzles me is that you would think that pricing would be a function on the micro economic level of cost of production plus a profit, but that doesn’t seem to be true either. It seems like pricing is always driven by what the market will bear instead of what it really costs to produce anything.