Study Guide to Man, Economy, and State with Power and Market

More documents

Recommendations

Info

Chapter 2: Direct Exchange 19 case. For example, if a person can trade two cows for 1,000 berries, then the “berry-price” of one cow is 500 berries. Other things equal, a seller will always prefer a higher price for his goods and a buyer will always prefer a lower price. Apparent counterexamples (such as someone selling a car to an in-law at a lower price than could be gotten from a stranger) are not comparing the same goods. 5. Determination of Price: Equilibrium Price A sale can occur when the minimum selling price of the seller is lower than the maximum buying price of the buyer. These minimum and maximum prices can be determined from the value scales of the individuals in the market. If there are only two individuals, usually there will be a range of possible prices. Praxeology alone cannot say which particular price will be used; it depends on the relative bargaining skill of the individuals. With the addition of more and more buyers and sellers to the market, the zone of indeterminacy shrinks, so that only a few (or possibly one) price will “clear the market.” The demand for a good indicates the quantity of units that buyers desire at various hypothetical prices. The supply of a good indicates the quantity of units that sellers offer at various hypothetical prices. These can be depicted in a table (or schedule) or plotted as a graph (or curve). One must distinguish between a change in demand (movement of the demand curve) versus a change in quantity demanded (movement along a given demand curve), and the same for supply. An equilibrium price is one in which quantity supplied equals quantity demanded. Graphically, it occurs at the intersection of the supply and demand curves. The market tends toward equilibrium: If the current price is above the equilibrium price, there is an excess supply (“surplus”) and sellers reduce their asking price. If the current price is below the equilibrium price,
20 Study Guide to Man, Economy, and State with Power and Market there is an excess demand (“shortage”) and buyers increase their offer price. There is a tendency for one price to rule over a market. If there weren’t, then arbitrage opportunities would exist; a middleman could buy low and sell high. 6. Elasticity of Demand The elasticity of demand is the ratio of the percentage change in quantity demanded and the percentage change in price (the negative sign is omitted). If the elasticity is greater than one, the demand for the good is “elastic,” while if the elasticity is less than one the demand is “inelastic.” Note that a higher price will lead to lower total spending on a good if its demand is elastic, while a higher price will lead to higher total spending if the demand is inelastic. 7. Speculation and Supply and Demand Schedules Supply and demand take into account all factors influencing people’s selling and buying decisions. In particular, someone may refuse to sell a good at a certain price, because he speculates that the price of the good will rise in the near future. Or, a buyer may refrain from purchasing a good, because he speculates that the price will soon fall. Such speculation (if correct) “flattens” the supply and demand curves, and speeds the approach towards equilibrium. 8. Stock and the Total Demand to Hold Rather than analyzing traditional supply and demand, we may also understand price formation using the concepts of total stock and total demand to hold. The stock of a good is the number of units existing at any given time. The total demand to hold consists of the number of units desired by buyers, plus the
Page 2 and 3: STUDY GUIDE TO MAN, ECONOMY, AND ST
Page 4 and 5: STUDY GUIDE TO MAN, ECONOMY, AND ST
Page 6 and 7: CONTENTS INTRODUCTION . . . . . . .
Page 8 and 9: In June of 2004, I became convinced
Page 10: Introduction ix appropriate, I have
Page 13 and 14: 2 Study Guide to Man, Economy, and
Page 29: 18 Study Guide to Man, Economy, and
Page 50 and 51: Chapter Summary In a money economy,
Page 52 and 53: Chapter 4: Prices and Consumption 4
Page 64: Chapter 4: Prices and Consumption 5
Page 80 and 81:
Chapter Summary In the evenly rotat
Page 82 and 83:
Chapter 6: Production: The Rate of
Page 84 and 85:
Page 86 and 87:
Page 88 and 89:
Page 90 and 91:
Page 92 and 93:
Chapter Summary This chapter explai
Page 94 and 95:
Chapter 7: Production: General Pric
Page 96 and 97:
Page 98 and 99:
Page 100 and 101:
Page 102 and 103:
Page 104 and 105:
Chapter Summary Entrepreneurial pro
Page 106 and 107:
Chapter 8: Production: Entrepreneur
Page 108 and 109:
Page 110 and 111:
Page 112 and 113:
Page 114 and 115:
Page 116:
Page 119 and 120:
108 Study Guide to Man, Economy, an
Page 121 and 122:
Page 123 and 124:
Page 125 and 126:
Page 127 and 128:
Page 129 and 130:
Page 132 and 133:
Chapter Summary Consumer preference
Page 134 and 135:
Chapter 10: Monopoly and Competitio
Page 136 and 137:
Page 138 and 139:
Page 140 and 141:
Page 142 and 143:
Page 144 and 145:
Page 146 and 147:
Chapter Summary Like all goods, the
Page 148 and 149:
Chapter 11: Money and Its Purchasin
Page 150 and 151:
Page 152 and 153:
Page 154 and 155:
Page 156 and 157:
Page 158 and 159:
Page 160 and 161:
Page 162 and 163:
Page 164:
Page 167 and 168:
Page 169 and 170:
Page 171 and 172:
Page 173 and 174:
Page 175 and 176:
Page 177 and 178:
Page 179 and 180:
Page 181 and 182:
Page 183 and 184:
Page 186 and 187:
Chapter Summary Economists often ta
Page 188 and 189:
Chapter 1: Defense Services on the
Page 190 and 191:
Chapter 1: Defense Services on the
Page 192 and 193:
Chapter Outline 1. Types of Interve
Page 194 and 195:
Chapter 2: Fundamentals of Interven
Page 196 and 197:
Page 198:
Page 201 and 202:
Page 203 and 204:
Page 205 and 206:
Page 207 and 208:
Page 209 and 210:
Page 211 and 212:
Page 214 and 215:
Chapter Summary Society is composed
Page 216 and 217:
Chapter 4: Binary Intervention: Tax
Page 218 and 219:
Page 220 and 221:
Page 222 and 223:
Page 224 and 225:
Page 226 and 227:
Page 228 and 229:
Page 230 and 231:
Chapter Summary There has been litt
Page 232 and 233:
Chapter 5: Binary Intervention: Gov
Page 234 and 235:
Page 236 and 237:
Page 238:
Page 241 and 242:
Page 243 and 244:
Page 245 and 246:
Page 247 and 248:
Page 249 and 250:
Page 251 and 252:
Page 253 and 254:
Page 255 and 256:
Page 257 and 258:
Page 260 and 261:
Apriorism, 1, 9 Ability-to-pay prin
Page 262 and 263:
Index 251 Equilibrium, 47, 104 macr
Page 264 and 265:
Index 253 Medium of exchange, 27, 3
Page 266 and 267:
Index 255 See also Economy, Evenly
show all

Study Guide to Man, Economy, and State with Power and Market

Create successful ePaper yourself

Delete template?

Save as template?