by M. E. Cravens
Often, someone says, "They set the price too high." He pictures a mythical "they" as controlling the particular product and, somehow, saying what consumers must pay for it. But, just how true is this picture?
Most folks have attended an auction. Perhaps it was the sale of pies or boxes at a bazaar, or of farm products or household goods. Who sets the price at such auctions?
Many factors affect these auction prices, but they are finally determined by the amount and the quality of goods for sale, the size of the crowd, the bidders' supply of money, the mood of the occasion, and similar situations. Sometimes the auctioneer will announce that if he cannot get a certain price, the owner will not sell an item. If none of the bidders will pay this price, the owner has set a price that is above the market, and no sale is made. However, the owner has only postponed the sale—if he wants to sell—in hopes that at a later time he will obtain his price.
Dr. Cravens is Professor of Agricultural Economics and Rural Sociology at Ohio State University. His article first appeared in the January 1958 issue of Timely Economic Information for Ohio Farmers.
380
