The owner of the house at 123 Elm St., Ms. Jones can sell her house for any price she can fetch for it, and she can refuse to sell it at any price that is offered to her.
So when she learns from her real-estate agent that the going price of similar houses in her neighborhood is around $400,000, she then lists her house for sale at, say, $405,000, she literally is the person who sets the price at which her house is listed for sale. But does she determine the price of her house?
No.
No one is forced to buy her house; moreover, all potential buyers of her house have other options of houses to buy or to rent. It is no more accurate to say that Jones determines the price of her house than it is to say that the buyer who agrees to pay $405,000 for Jones’s house "determines" the price of the house.
The price is the result of a wide, deep interaction of many buyers and many sellers, each bargaining in light of their own unique knowledge of time, place, and circumstance.
The same is true of oil prices and gasoline prices.
Source: http://cafehayek.com/2005/09/prices_as_the_r.html
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