Money Rules to Live By V

Why supply and demand rule
For the most part, prices are set by the interaction between supply and demand. If demand for something suddenly shoots up and the available supply of that something doesn't change, then prices will increase. If demand drops or supply increases, though, prices typically fall.
Here's an example. Say rock star Brittany Amber Tiffany is photographed wearing a cap with the brand name of a Health Care company. Suddenly, all her fans and half the people reading local magazine decide they, too, need the Health Care company's hat. The companies that stock these hats figure out a good thing when they see it, and double, then triple, the price. The hat actually worn by Brittany sells for a mint on eBay, earning a notice in mainstream newspapers and furthering the craze.
The Health Care company wants a piece of this action and starts cranking out hats by the ton. Suddenly you can find one in every Cold Storage and Robinson. The retailers can no longer command a premium for having a rare item (thanks to the increase in supply). In fact, the hats start seeming a heck of a lot less cool, lowering demand; Cold Storage and Robinson slash the price still further to get rid of their unwanted supply.
Only a big increase in supply or a sustained decline in demand is likely to affect prices.
Supply and demand have a lot to do with our incomes, as well. If we have rare skills that are in high demand by employers, we can negotiate higher pay. If, on the other hand, there are a lot of people that can do what we do or the employer need for what we do is limited, our incomes are likely to be stunted. Think about that, and stay relevant or risk losing your rice bowl.