Assume a Can Opener

Conclusion . . .  The
endeavor from here on is to inflate this into a claim about the real world of
many people, many corporations, and innumerable products.A
first order conclusion is that the way to the best possible world is to let
everybody do whatever trading they want, of anything, with anybody.The
posited “free market” economy, if left to its own devices, will turn out
maximum prosperity, efficiency and happiness for all.Government
just needs to leave it alone – an idea called laissez faire – French for “let
do” – a phrase popularized in the 19th
Century. This, however, depends on certain assumptions . . .•“RationalActors ”:Peopleallocatetheirspending*
tomaximize
their “utility,” a mysterious psychological property such that $1=1 utile.•Willing
sellers and willing buyers.•Perfect
information: Buyers and sellers know everything important about the product.•Corollary:
Consumer sovereignty – consumers generate demand.•Manysellersandmanybuyers.•Willingsellersandwillingbuyers.•Declining
marginal utility.•No “externalities” – 100% of the costs and benefits of transactions are captured
by the parties.•Allgoodsare“excludable”
and “rivalrous,”i.e.
non-public Next, we ' ll take on these assumptions and see what ' s really true.   

Source: Stayin' Alive - February 27, 2024 Category: American Health Source Type: blogs