Demand and Supply chapter). These contrary effects, however, will reach natural limits. At some point, if the

price is high enough, the quantity demanded will decline. Conversely, when the price declines far enough,

buyers will increasingly find value even if the quality is lower. In addition, information eventually becomes

more widely known. An overpriced restaurant that charges more than the quality of its food is worth to many

buyers will not last forever.

CLEAR IT UP

Is consumer behavior rational?
There is much human behavior that mainstream economists have tended to call “irrational” since it is consistently at

odds with economists’ utility maximizing models. The typical response is for economists to brush these behaviors

aside and call them “anomalies” or unexplained quirks.
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