Supply and demand yes.
Yet is it really that simple?
Even when all the merchants have the same hat costs, inventory, and demand, hat prices vary.
Why wouldn’t a store with more baseline expenses, such as higher rent and employee salaries (and employees), not charge more per hat to account for their greater profit needs?
Then again what about other motivators for pricing? Some people, regardless of the cost to maintain their business, may need more profits to support their families.
Or sometimes stores add more to their prices to account for expected losses due to various factors, including damaged hats.