"Where does all that additional money go, and who benefits from it?"
Doesn't reduced overall supply usually mean that the total amount of money (price * supply) also reduces? ie. in total, there is no additional money.
It depends on the price elasticity of demand. When it's 1 - that is, when a 1% change in price results in a -1% change in demand - then any change in supply reduces the total amount of money spent on the good. If demand is more inelastic, then increasing price will increase total spending. Oil is a particularly inelastic good.
hanwenn · · focus · HN ↗
Doesn't reduced overall supply usually mean that the total amount of money (price * supply) also reduces? ie. in total, there is no additional money.
ThrustVectoring · · focus · HN ↗