Or police talking about seizing X million dollars worth of drugs where they're getting their valuation from street value but seizing the drugs in wholesale quantities from the manufacturer - and ignoring the fact that a large portion of the labor/risk that contributes to that price hasn't actually happened yet.
I’m not sure drugs are that perfect of a market. The buyer doesn’t really have visibility into price/quality across sellers and drug buyers are not always rational, two conditions for perfect competition.[1]
Actual economics is far more complex than the simple supply/demand curve taught in 101 classes.
Sure, it certainly won't immediately adjust perfectly, but when authorities close some route or bust a large shipment, there will likely be some price change because of limited supply, increased risk (and cost) for transportation, right. It's not like drug buyers will just say "oh, you don't have any this month? okay, see you in six weeks".
Reducing supply will remove money from the economy, although less than the amount of money that was taken (the same happens whenever the government levies a tax).
This is amateur hour RIAA damages calculations. To get a truly spicy number you gotta multiply the number of downloads by the statutory limit for willful infringement--$150,000 per infringed song.
So your ipod 4th gen with 5000 songs is worth $750 million.
"Well, it was a $2 mp3, and ~100M copies were downloaded, that's $2 * 100M = $200M in lost revenue/damages!!"
As if 1 download = 1 guaranteed lost sale. On the contrary sometimes 1 download = 1 future sale where there was none before!
By that logic the easiest way to make a million is just to download (or copy) a $1 mp3 1M times - congrats, you now own $1M in assets!