- Cost of arranging/negotiating/enforcing contracts and agreements. There are three categories.
1. Physical Costs: Transportation, distance, (time?)
2. Costs from Ignorance: Not being fully aware of all the opportunities available.
3. Interferance: from religious and cultural rules, laws, ect.
- The best transaction cost reducers are the "Middle Men" (ex. grocery stores) They have the comparative advantage in reducing transaction costs.
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What is it that solves the massive information problem in large, complex, impersonal, societies?
Prices: Signal of value and scarcity. Steers resources to where they are most valued.
Prices emerge from markets, and produce order. There are three categories.
1. $ prices (dollars)
2. Non-$ prices, (time, health, ect.)
3. prices which are a mix and have some $ price and some abstract price as well.
In the marker there are two types of people:
Buyers = Demanders
Sellers = Suppliers
Everyone(people, companies) are both buyers and sellers, whether it is for goods or for production factors.
-Rizzo
Daniel Gaona
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