Alternatively, if consumers are unwilling to purchase the current output of a good, inventories will accumulate and there will be downward pressure on price. In turn, the lower price will encourage consumption and retard production until the amount demanded by consumers is once again in balance with production of the good. Markets work because both buyers and sellers alter their behavior in response to changes in incentives. Some critics have charged that economic analysis only helps explain the actions of self-centered, greedy materialists. That view is false.
People act for a variety of reasons, some selfish and some humanitarian.
The basic postulate of economics applies to both the altruist and egotist. The choices of both will be influenced by changes in personal costs and benefits. For example, both the altruist and the egotist will be more likely to attempt the rescue of a small child in a three-foot swimming pool than in the rapid currents approaching Niagara Falls. Incentives influence the choices of both. There is no such thing as a free lunch.