Supply and Demand

I hear it all the time. Market price is governed by supply and demand. Nerds are in short supply so they are expensive. Make more nerds, supply goes up, price comes down. Nerds are two for a dollar. Convert a pocket full of nerds to Republican drones and they become scarce. Price automagically goes up.

Or does it?

Does constant or even increasing demand for nerds cause the price of a nerd to go up? Or does it permit those who have nerds in hand to decide to raise the price? Are those two things synonymous? Does demand cause price to rise or does it permit price to rise?

Yes, I understand about the fiduciary responsibility which which is cited by the producers of nerds to force them to maximize the return on investment to owners of the nerd factory. But is there no constraint on that responsibility? Can prices rise until demand elasticity sets in and people choose suits and long neckties over T-shirts and pocket protectors?

Dump the nerds and replace them with oil/gasoline. Are fuel producers free to exploit unbounded price inflation? Or is there some point where one should say that a limit has been reached. Can further profits be excessive and harmful to the overall economy, leading to economic collapse and huge losses for the producers?

I don't know. I quit producing nerds and my family sold their part of southeast Texas without finding oil. Now I make notes (in the key of your choice), but have no answers. Are there readers out there who have something to say?

Akakie