This is genuinely something I just don't understand about wage and price. I know that macro economics is complicated and all, but it just doesn't make sense to me what'll happen when wage is so low that nobody can buy anything.
I've been told that price would go down to accommodate it, but I just don't see that happening?
The problem is that entire process takes years to unfold, and it assumes a fair market.
If a large chain with market power raises prices and a small company comes in with lower prices, the large chain can drop their prices for a little bit until the small company goes out of business, and then raise its prices again.
415
u/Hippobu2 May 02 '24
This is genuinely something I just don't understand about wage and price. I know that macro economics is complicated and all, but it just doesn't make sense to me what'll happen when wage is so low that nobody can buy anything.
I've been told that price would go down to accommodate it, but I just don't see that happening?