Chapter Four

The market is dictated by a changing demand that under normal circumstances cannot be easily predicted but yet the price of any and all goods must be set to a price that meets the demands of most people while allowing for the most profit.
Supply however can also play a role in demand which then affects the pricing. Competition is a well known method of keeping the price of goods at a reasonable price because when one producer's price aren't low enough for a consumer, that consumer can simply walk away and buy a cheaper and possibly better product from another producer. If this happens too often then a producer must lower their prices to match with their competitors in order to stay relevant in that market.
Without competition and a producer being the only one to make a certain good, it gives them free reign over their pricing and demand curve does not matter if it is needed by most consumers. This usually leads to gross overpricing and usually does not end until the government steps in to say no.
Lower prices however generally lead to an increase in demand simply because consumers can afford more of it. For example, if one hot dog stand sold their hot dogs for $1.50 and another for $2.50, you would probably buy two hot dogs from the one that sells it for $1.50 simply because it's cheaper.
However, when supply runs low then the cost of a product must go up to make up for its increased cost to produce and will generally lead to a decrease in command because consumers can't afford as much of it anymore.
Personal preferences also determines how consumers buy, and because almost everyone is different, the changes in demand in this aspect can never or rarely be predicted accurately. In extreme cases however, such as addiction, pricing is of little matter other than the fact that the amount of the good that is bought depends on when the consumer runs out of money. This is usually where the government steps in but only if the consumer wants help.