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Saturday, December 3, 2011

Class 36 - A World of Prices

People economize because of prices so when rationing, only people who want goods get them.

Centralization vs decentralization
Central planner decides the producer, who gets the good, and how much to make. But no one has all the information for this.

Price Fixing
A good's price shows what is happening in the economy. Buyers hate high prices/sellers hate low prices. Price changes.

When gas prices go up it is price gouging. When prices go down, they are exploiting workers and competing. When prices are equal the companies are collaborating.
Price fixing = rent control

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