If the owner does not get his price, he may keep the item or sell it at a lower price. In either case, his setting the minimum price did not force a sale at the set price. The bidders placed their own value on the item.
This simple auction method of price setting is in many ways similar to that of most American businesses today. A good example is the supermarket.
The supermarket operator decides his retail prices—sometimes at near the wholesale or farm prices and sometimes at much higher prices. Anyone who has observed the relationship between retail and wholesale prices has seen this in both individual retail and chain stores.
Here is how this pricing system works for an individual commodity. By December, each year, producers and food handlers can estimate fairly accurately the quantity of apples available for sale until the next crop. Few consumers are aware of the size of the apple supply. On the basis of experience, farmers and handlers who own apples decide to sell or not to sell at the current price. Their decisions may cause this price to fluctuate, according to the number of apples reaching the market.
The retailer bases his price on this wholesale price. The consumer looks at the retail price and decides whether or not to buy. If her purchases are at a rate too slow to move all of the apples from storage, handlers must somehow speed up the sales.
Usually a lowering of the asking price will bring a consequent increase in sales. It is a continual trial and error process in which the owner of apples keeps one eye on his apple stocks and the other on the rate of purchase
