Someone asked a simple question: when wages increase, why don't companies just raise prices such that it cancels out the wage increase?
Of course, this isn't what happens in real life since real wage growth exists. But what's the best way to intuitively explain why that's the case?
A simple explanation could be that the demand curve shifting outward due to higher wages leads to an increase in quantity and price, but that's just from looking at lines on a graph.