Answering your other point also:

The seller makes 'an invitation to treat'. Once the buyer accepts a contract is formed. Under certain circumstances the buyer can 'cancel' the contract (goods not as described, return clauses in sellers description etc.)
The seller can not cancel the contract. He can try and 'terminate' it. The buyer could sue for breach of contract.

Closest example I come up with for your scenario is that you offer me a chip for $x. I accept and pay. Another buyer then offers you $x + $700 for the chip. You accept his offer and tell me 'youve changed your mind' or 'accepted a better offer' etc. and refund my money. I could claim damages. It gets complex. I could have told a customer I had obtained the chip for him and he could have paid me. I could lose that customer. A court may award material damages equal to something like the $700 but punitve damages of any sum they see fit.

In your first question, you asked "Is the seller morally obligated to return the money"

IMO the seller is morally obligated to make good the difference. However, the seller is not legally obligated to do anything.

What about when you buy something in auction for $x + $700 and then find it at $x the next day? Same scenario.