Chapter 4 - An Overview of Prices

Scarcity

means that we do not have the option to choose whether or not to have an economy in which people compete.

alternative users

Allowed by prices to compete for scarce resources in the marketplace.

Systemic causation

involves more complex reciprocal interactions.

Complex effects

may be a result of either simple causes or complex causes.

Incentives

matter because most people will usually do more for their own benefit than for the benefit of others.

System Rationality

The tendency to personalize causation leads not only to charges that greed causes high prices in market economies, but also to charges that stupidity among bureaucrats is responsible for many things that go wrong in government economic activities.