I was sitting there thinking and I just realized that the equilibrium price gives the maximum profits.
I don't want to sound like an idiot and if 'my theory' is true it is perhaps obvious to those of you who are very
versed in Austrian economic.
I just want to ask if it is true and if there any Austrian economists or any school of thought who also say
that?
A producer of apples would love to sell them at 1 000 000 each but if he did that he would make no money,
so he has to bring it down to a level where he gets rid of all the apples and makes money.
So theoretically a free market price gives maximum profits and price controls can only reduce these profits
and are harmful.
The increase in demand that comes with price ceilings cannot compensate the losses the producer
suffers. Even at a low price demand does have a limit.
Is this right?
This is the general neoclassical framework.
Generally the market clearing price is the one that allows the greatest total gain by [consumers + producers].
Even if the demand had no limit, you have to factor costs in... No demand will save you if you are losing a dollar per unit you sell...
Like has been said, in the neoclassical framework, perfect competition results in the maximum 'profit' for producers and consumers, however other systems result in greater profit simply on the consumer side, such as monopoly, particularly with price discrimination.
Perhaps someone more knowledgeable on Austrian Economics could shed some light onto objections/differences (if any) to the above in AE?