ECON WEEK VII
ECON WEEK VII econ 103-004
Popular in Microeconomic Principles
Popular in Economcs
This 2 page Class Notes was uploaded by Wesley Hunt on Friday October 30, 2015. The Class Notes belongs to econ 103-004 at George Mason University taught by Donald Boudreaux in Fall 2015. Since its upload, it has received 55 views. For similar materials see Microeconomic Principles in Economcs at George Mason University.
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Date Created: 10/30/15
Prices are a signal to suppliers to indicate how much to supply Law of One Price More of a trend than a law We observe that at any given time in any particular area a good or service tends to sell at the same price with minor differences Prices change over time but why do prices at any given time for the same object sell for roughly the same price ArbitrageBuy low sell high Arbitrage narrows price and tends to balance them out We tend to observe only one price for any particular entity Arbitraging in one area causes the price to go up in its original site and down in the new site ultimately making the prices more even A bushel of wheat is better used for a starving child than a dog who does not need it Arbitrageurs lower the price because they increase the supply in an area Arbitrage moves valuable goods from where they are high price to where they are lowpriced Seeking only their own gain arbitrageurs can bring out good outcomes ONE MORE THING When this opportunity comes around then the local fortunes do not merit quite as much as they othenNise would Arbitrage through timespeculation Arbitrageurs are speculators of the future Speculators can be wrong but they hope they are right Speculators unite people through time people act today like they care about what happens tomorrow Price ceiling causes shortage because it never lets supply catch up to demand