"Undercutting" is a natural ebb and flow of a marketplace. It is frustrating, but it's not immoral.
Actually any basic economics class will tell you there are laws that limit undercutting otherwise its easy for someone to monopolize. Since this is a game, no such laws exist and since people value their time in game differently - i.e., someone wont care much about spending countless hours farming so they will not build that into the price of a finished item(s) they worked on, whereas someone else will account for everything. In real life, your time is of value, unlike a video game, so there has to be some measures taken to keep the market steady.