Fundamental demand and supply theory implies that the final price of a good displays the value placed on it (and thus, satisfaction gained) by consumers. If the retail price of a good is higher than the value placed on it by consumers, quantity demanded will fall, and thus, in theory, price would automatically fall to reignite quantity demanded.

So, we could say that, in general, the higher the final price of a good, the higher its satisfaction to consumers. After all, why would you pay so damn much for something unless it’ll be more satisfying than cheaper stuff which you could purchase in greater quantities? In many cases, this does hold. A mansion may cost tens of times more than an apartment, but usually, the mansion will provide greater satisfaction - whether from the sheer size of the residence, or the prestige that comes with a large house.

But like most aspects of economics, there are exceptions. Take for example a recent article on video games, where the author argues that:

Not every game that gets released with a $49.99 or $59.99 price tag is a good game. By the same token, not every game released with a bargain price is a piece of junk.

The author is, in fact, correct. Even our expensive mansion may end up being less satisfactory compared to the relatively cheap apartment if the mansion’s water supply breaks down every other day or if woodwork collapses every month. How is this rationalized in A-Level Economics?

Well, there is one simple explanation for this: Imperfect/incomplete information. At the point of purchase, it is rare that you would know whether a particular game is good or not. Unless you’ve already read a review by a gaming magazine, you have far too little information to make a perfect decision. So, more often than not, consumer judge by the price of the good. If the game is as expensive as that bestseller you played last month, then it’s surely of (nearly) equivalent standard. To an extent, this is rational. But as we’ve seen, it is not always correct.

So, clearly not every economic principle holds in every situation. Most of the time, the assumptions underlying the principle have to be examined.