How do you react to being undercut?

[Zigkid3]

I can understand If the cheapest item on AH is 10.000 gil and then someone put theirs at 9.999 or 9.990, its reasoneable, i do it. but I dont understand when the cheapest item is 10.000 and then the troll comes and put his 6 items at 5.000.... seriously... wtf???

As Nenin touched upon, it has to do with liquidity. Sure they can do 9900 gil instead and get more out of it. But some people prefer smaller and faster profits (if they themselves managed to get it for even cheaper than 5k) as opposed to larger and slower.
What a lot of people don't realize when flipping items on the market is to look at the turnover of that item. most people worry just about the money, and look at the history just for the prices. However it's also beneficial to look at the dates/times items were bought. are the most current entries in the history all from just today? a mix of today and yesterday? or is it slow and only have had a few buyers over a long time period?
So if they actually got it for 2k, see its selling for 10k they can sell for 9k and wait a maybe 2 days or sell it at 5k for smaller profit and get it in hours.
It honestly depends on the person. It's also likely the same person is selling the same item for two different prices on two different vendors to trick people into buying up the lower one making them think that they can sell for higher, though that's less economic and more psychological but that could be it too.
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I find it funny when i see people complain about undercutters, if you can't deal with an undercutter then you shouldn't be in the market. period.