Transactions Costs and the Middleman
ex:a) consumer: Wegman's is convenient! Don't have to go to actual source to buy goods, all right there in one pleasant location
b) producer: Orbakers does not have to branch out hugely to sell apples to people, espcially people not from the area who do not know their brand
Rich: lower transaction costs, create bridges between people
Consider: we live in a highly impersonal, large world
How goods get produced?
How get them to people that want them?
-->Specialize; can't be self-sufficiant
Exchange can occur in small groups
2 Problems Groups Face:1) Information; how understand what people want
-how deliver in a cost effective manner
2) Transactions/costs; distance, lack of trust (we're suspicious)
Where Prices Come From:
Price = information;
-signals to buyers of what is scarce
-signal to sells what people value (are they lined up?)
==>always order to emerge and evolves in a market setting
Markets
"Markets are like ether"
more than where trade is physically, place of exchange;
-Actually a process
Markets = any group of potential buyers & sellers
-stocks, food carts, internet
-any decentralized unorganized interaction btwn buyers & sellers
(emerges)
$ prices <-------- --------> Non $ prices
and/or
To Produce Order
ex: Free Healthcare (cue reason the 11 am class catches up to us)
Lots of buyers, sick people who need service; $0 price, what emerges?
--> Don't pay money, but pay by waiting longer for care
a) US system more egalitarian
b) uninsured Amer. get as much if not more preventative care than others
c) low income whites in US in better health than low income whites in Canada
d) minorities do less well in both, but treated better in US --> emergency rooms faster
==> people who like healthcare in Can/Swed don't care about the result, they care about the process, even if free, still rationed
Rochester: in HIGH demand; we pay loads of $$$ but still long line to get in. How decided?
-sports SATs AP credits, clubs => ration by quality
Lots of buyers, sick people who need service; $0 price, what emerges?
--> Don't pay money, but pay by waiting longer for care
a) US system more egalitarian
b) uninsured Amer. get as much if not more preventative care than others
c) low income whites in US in better health than low income whites in Canada
d) minorities do less well in both, but treated better in US --> emergency rooms faster
==> people who like healthcare in Can/Swed don't care about the result, they care about the process, even if free, still rationed
Rochester: in HIGH demand; we pay loads of $$$ but still long line to get in. How decided?
-sports SATs AP credits, clubs => ration by quality
Buyer “Demander”
| Sellers “Suppliers”
|
No such thing as perfect competition
-# of firms does not matter
-No spill overs of effects (Rizzo buys lots of coffee, doesn't affect the price of the coffee I buy)
Demand = a relationship btwn amnt you wish to obtain & the sacrifices you must make to get it
-Trade off changes when marginal circumstances change
ex: To get an A in Rizzo's class, must study 9 hrs weekly. Sure, no problem
BUT in the spring, you get a job, pledge, party...suddenly those 9 hours are very costly
Quantity Demand (a plan) (a number)
- amnt of a good that buyers are willing and able to consume at a particular price
-preferences , constraints (income)
Law of Demand: other things equal (ceteris paribus) that quantity demand of a good falls when its price rises
Quantity Demand (a plan) (a number)
- amnt of a good that buyers are willing and able to consume at a particular price
-preferences , constraints (income)
Law of Demand: other things equal (ceteris paribus) that quantity demand of a good falls when its price rises
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