They prevent beneficial transactions from taking place. Middlemen, despite their terrible reputation, have a comparative advantage in lowering transactions costs for consumers and producers by bringing buyers and sellers together. Supermarket is the ultimate middleman by reducing transaction costs between farmers and consumers. At Wegmans, you were buying that apple at the particular time in that location at that temperature - not just an apple. Bridging the barriers between transaction costs gets your rich. The reason middlemen are to able to do what they do is because they echange property rights.
Demand
Since we live in a large, impersonal world, how do we produce goods and get them to the people who want them? People must specialize (and it cannot be planned) and not resort to self sufficiency. While exchange can occur in small groups, 2 problems arise in a world of 7 billion.
Information Problem - How do you know what people want?
Transaction Cost Problem
What is a price really? It is information (signals to buyers and sellers). Signlans to buyers about what is scare. Also a signal to sellers about what you (buyers) value. This steers knowldege and resources in a way that allows order to emerge.
Demand is not an all or nothing concept. It is a relationship between the amount you wish to obtain and the sacrifices your must make to get it. Quantity demanded (distinct different from demand) - It's (a plan) (a number). It's the amount of a good that buyers are willing and able to consume, at a particular price.
Law of Demand - other thins equal, the quantity of a demanded good falls when its price rises.
Markets
What is a market? Any group of potential buyers and sellers. Better definition: Any decentralized unorganized interaction between buyers and sellers constitutes a market. When you have a market, 1 of 2 things will emerge (1) The production of money prices or (2) non money prices will occur. The goal being to produce order (order - things work, Rizzos cup of coffee). Most markets blend non money costs and money costs.
Buyers - "Demanders" - In a goods market, the demanders are households. But in factor markets, the demanders are the firms.
Sellers - "Suppliers" - In the goods market, supplies are the firms. In the factor markets, suppliers are the households.
-Rizzo
Daniel Gaona
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