Why do Austrians say price is set by preference rather than production cost?

[John_James]

@Consumariat

I don’t want to abandon another thread, and for that reason I will make one point which I believe sums up the position of mine that seems to be the root of out disagreements. If anyone specifically needs me to respond to their previous questions then let me know and I will attempt to do so, but hopefully this post will make things clearer (either in where I am misunderstanding yourselves, or where you are misunderstanding me)

First, I want to make sure you caught my last direct response to you, here…(It ended up being the very last post on that page and someone came in and posted right after it so you may have missed it)

@Consumariat

What I believe to be the issue of conflict is this; I maintain that price determines the amount of demanders - at any given price there will be a certain amount of people demanding that good (nothing controversial so far). But it appears to me that Austrians are saying that the amount of demanders determines the price. This is absurd. It’s like saying that because the score of a football game determines who the winner is, we can find out the score of a game simply at looking at who won.

Be sure to read through that response I linked above, but look at it this way:

If you offered to sell a widget … and decided since it cost you $25 to produce, you would set your price at $50 …What if no one bought at that price? Most producers in that situation would lower their price. What if someone came up to you and said “I’ll buy that widget for $40” and you decided to take the deal. What determined the price?