Economic theory

Supply and demand, if the supply goes down, the price will go up. If the demand goes up the price will go up.

On the other hand, if supply increases and/or demand drops, prices can evaporate. This seems simple, but it isn't. Regard the price of tomatoes, or any other product. There is a bumper crop, and the public has a taste for BLTs. Large supply and large demand. You might think that one would cancel out the other. However, the tomatoes are in a field down in Mississippi, and the BLT craze is in Denver. The cost of raising, harvesting, shipping, and all the associated costs involved (middlemen, regulatory agencies, advertising, etc.) have to be added to the cost of the tomatoes. It the price of oil rises, then transportation costs rise and so will the price to the consumer.

Inflation can also drive prices up. If the money supply increases too much, then prices will rise to absorb it. There are a number of factors that can get the money supply out of balance, and that is one of the reasons why the Fed is so important to maintaining a stable, yet dynamic economy.

There are other factors that might lie behind price changes when both supply and demand are steady. For instance, business owners might adjust prices to reflect a business strategy they are pursuing. Cut prices to gain a bigger share of the market, for instance. One might raise prices until demand looks as if it might fall off if there isn't serious competition.

The economy seems simple, but it isn't. Economics is referred to as the "dismal science", and it is certainly far from the most exciting academic discipline. Though we have made great strides in understanding economic principles in the last 250 years, it remains a mystery to many, and is still something of an art even to the most brilliant economists.

It's the "Hey, I can get rich off this!" theory.