Ask Mister Economy is published weekly in the Stillwater NewsPress, Stillwater, Oklahoma.

Mister ECONOMY's

SEVEN RULES


1. Scarcity
Our economic pie is limited. Because there's only so much stuff to go around and everyone wants more than they have, what one gets, another doesn't. That means virtually every good produced, every action taken has an opportunity cost.


2. Subjectivity
Value is subjective. Prices are subjective. Everyone has their own likes and dislikes and are willing to pay different prices for what they buy. From the sellers side, prices are determined by production costs which depend on the subjective value of the resources.


3. Inequality
Life is unfair. Differences in natural abilities, acquired skills, individual effort, political influence, and parental wealth mean that some have more income, wealth, and control over resources than others. It frequently means that them that gots also gets.


4. Competition
Competition is good. A competitive market is an efficient market. Competition among buyers and sellers brings out the best in them and in our economy. Less competition among sellers creates higher prices for buyers (and vice versa).


5. Imperfection
Nothing is perfect and never will be. We can fix some problems, but we can't fix 'em all. Markets have deficiencies that can be corrected only by government action. Government flaws, though, is prone to prevent corrective actions and even worsen the economic condition.


6. Ignorance
No one knows everything. Information is a scarce commodity. Acquiring information, like producing any good, entails the opportunity cost of limited resources. Those with more resources can secure more information. Sellers, who have a good, usually have more relevant information than buyers who want it.


7. Complexity
There's more than meets the eye. Every action has many effects, some intended and obvious, others unintended and more subtle. Any action that is good for one person is likely to be bad for another. One's expense is another's income.


Copyright ©1996 Orley Amos


Questions for Mister ECONOMY can be sent to: mrecon@amos.bus.okstate.edu

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