Foundations of the Market Price System
Index
Abundance 9, 12, 83
AC: Average costs See: Costs
Adjustments, by firms 199–206
Administered prices 267, 331, 365–67
Agriculture 166–68, 326, 364
Alchian, A. A. 81, 103, 230n, 287
Allen, W. R. 81, 103, 230n, 287
Altruism 105–13
Annuity 262–63
Anti-trust laws 319
AP See: Administered prices
Arbitrage 43–44
Asceticism 12–13, 318
Assaying 47
Atomistic firms 324, 336, 353–54
Autistic exchange 101–102
Banks, commercial 25
Barriers to entry See: Entry
Barter 14, 37–38, 40–45, 111
Bastiat, F. 33
Beg, borrow, or steal 2–4
Bergen, Edgar 110
Black markets 210
Boehm-Bawerk, E. von 90–92, 93–94, 238–39, 268
Borrowing 2–4
Bottlenecks 204
Broadway hit shows 210–12
Calculation, economic See: Economic
Capacity of production 203–204
Capital
accumulation See: Investment
consumption See: Depreciation
gain 263–64
goods 60, 62–63, 67, 251, 307
loss 263–64
markets 251, 256, 294
value 261–64
Capitalism 279–312
Capitalist production 65–66, 307
Capp, Al 9
Cartels 162, 174–75, 371n
Cash balances 50–54
Cash flow 66–67
Ceteris paribus 125–26, 162, 164, 171
Chamberlain, J. 298n
Chambers, R. J. xxiv-n
Charity 107
China 13
Choice-making See: Decision-making
Cities 32
Closed markets 323, 327 See also: Monopoly
Coefficient of elasticity See: Demand
Coercion 6, 111 See also: Force
Coinage 46–48
debasement 48
Commodity money 39–40, 45–47
Common law tradition 364
Comparative advantage 36
Competition 158, 174–75, 288, 319–72
as war 370–72
benefits to consumers 287–88
definition 320–21
foreign 298–99
free 291–303
imperfect 331–33, 351, 362–69
inter-industry 296–97
market structure 321–31
perfect xxvi, 324–27, 331–39, 345–50
critique of 352–72
price 355
quality 355
rivalrous 320–21, 354–61, 368–72
Complementary products 121–22
Compound interest 247
Conglomerates 296
Construction 67
Consumers
as producers 297–98
dollar ballots 287–88, 314n
See also: Consumers’ spending
goods 18–19
sovereignty xxv, 78, 279–86, 289, 312–13, 368–72
spending 29, 74–78
under socialism See: Socialism
Consumption 10–11, 23, 59, 116–17
Cost-of-production theory xxiv, 266–67
Cost-plus theory 266–67
Cost-push inflation See: Inflation
Costs 266, 273, 276–77, 340–43
average 68–70, 204, 232, 266, 357–59
cutting of 68–70, 201, 355, 357–60
explicit 254
fixed 340–42
implicit 254–56
interest 255
marginal 265, 342–43
opportunity 82, 254–56, 276–77
out-of-pocket 254
per-unit See: Costs, average
relevant 253–56
total 146, 340–42
variable 340–42
versus benefits 349
Counterfeiting 5, 46
Crusoe, Robinson xii, xvii, 1–3, 16, 59–60, 64–67, 76–77, 112, 117, 283, 310
Custom-order production 283
Cutbacks in production 201
D See: Demand
Daisy Mae 9
Davidson, J. D. xvii-n
Debasement, of money See: Money
Decision-making 81–113
influence of future 260–66
Deficit financing 7
Deflation 122–23, 143 See also: Price
Demand 25–30, 79, 115–43, 145–78, 294
and supply 24, 80, 180–99
derived 27–28, 73–74, 266
determinants of 117–24
elastic 145, 149–50, 154, 336
elasticity of xxiii-xxiv, 130–31, 136, 137, 145–78, 334–37
coefficient of elasticity 151, 177–78
determinants of 157–72
inelastic 145, 149–50, 154
unitary elasticity 131, 145, 150, 154, 177
farm products 166–68
for resources See: Demand, derived
graphing of 127–30
horizontal curve 334–39, 336, 337, 357
law of 117–18, 124–29, 135–43, 145–46
alleged exceptions 140–43
market 127–30
meaning of 27, 115–17
pent-up 227
schedule 129
shifts of 132–35, 175
Dependence effect xxvi, 313
Depreciation, capital 67, 255
monetary 49, 53
Derived demand See: Demand
Differentiated product 321, 322, 338, 345, 354, 355–56, 362–63
Diminishing marginal utility See: Marginal utility
Direct exchange See: Barter
Direct-use production 14–16, 76 See also: Crusoe
Discounted value 241–42, 244, 251–53, 266
Discounting 79
Discount loan 247–48
Disequilibrium 198, 207, 208–09
Disutility 238
Divisibility of money 41–42, 46
Division of labor 2, 4, 16–19, 31–58, 280–84
DOL See: Division of labor
Dolan, E. G. xiii-n
Dollar, origin of 56
Double coincidence of wants 41
E See: Equilibrium
Economic calculation 44
Economic democracy 288
Economic development See: Growth, economic
Economic growth See: Growth, economic
Economic man xx, 82
Economic means xvii, 4, 7
Economy size 140
Elasticity of demand See: Demand
Ends and means 261, 316–18
Entrepreneurial profit See: Profit
Entrepreneurship 72–74, 199–200, 237, 295
See also: uncertainty
Entry into market 294–96, 322, 325, 328–29, 330, 331, 354, 355, 362
Equilibrium, supply and demand 184–86, 206, 231–33
Ex-ante 95, 98–99, 101, 173–74, 230–32
Excess demand See: Shortages Exchange 4, 37–38, 44f, 83–84, 101–102
See also: Barter; Trade
Exchange medium See: Money
Exchange rates 43–44
Exchange value See: Money, value of
Excise taxes 163
Exit from market 322, 323, 325
Expectations 95, 122–24, 143 See also: Uncertainty
Explicit costs 254
Exploitation theory 235, 267
Ex-post 95, 98–99
Ex-post supply See: Supply
Fallacy of composition 3
FC: Fixed costs See: Costs
Fiat money 57
Financial assets 53, 66, 68
Financial intermediaries 294
Firms 17–25, 60
as discounters 243, 252–53, 256
as income-generators xix, 18–21, 74–78
as intermediaries 20, 22, 73–74
centrality of xix, xxii
Fischer, Bobby 327
Fixed costs See: Costs
Force 111 See also: Coercion
Form-utility 61
Foy, J. E. 312
Fraud 100
Free competition See: Free market
Freedoms See: Human rights
Free enterprise 311
Free entry 354, 355 See also: Free market
Free market xiii-xv, xxv, 179–80, 207, 272, 279–318, 323, 325, 362, 370–72
Free trade 34, 299
Future goods 240
Futurity of decisions 260–66
Galbraith, J. K. xxvi, 312–18
Garden of Eden 9, 12, 83
Geographic variation 36–37
Getting by 1–8
Goethe, J. W. von xii
Gold, as money 39–40, 45, 55, 57
Goodman, J. C. xiii-n Government 5–7
borrowing 7
and competition 292–93, 299–303
and monopoly 292–93
Gray, A. 31
Groseclose, E. 39n, 49
Growth, economic 59–78
Haines, W. W. 39n, 47, 48, 55
Hamlet 95, 96, 368
Hammurabi 245
Hayek, F. A. xiii-n, xxvi-n, 316n
Hazlitt, H. 93n, 300n
Heyne, P. T. 103–104
Hierarchy of wants 85
Homogeneity
of firms 356, 361
of products 321–22, 324, 336, 353–54
Horizontal demand curve See: Demand
Hospers, J. xiv-n
Households 16–23 See also: Direct-use production
Human action See: Decision-making
Human rights xxv, 176, 308–11
Human variation 36–37
Hyper-inflation 53
IC: Imperfect competition See: Competition
Imitation 360
Imperfect competition See: Competition
Implicit costs See: Costs
Imports 204
Imputation of values 261–65, 317
Incentives 286
Income 18–21, 24, 25, 26, 74–78
effect 137, 139
national 20
source of 74–78
structure 168–69
Increasing marginal utility See: Marginal utility
Indirect exchange 44–45
Individualism, methodological 102–105
Industrial Revolution 12, 13, 17, 32, 35, 111, 246, 298, 303
Inelastic demand See: Demand
Inequality 36
Inflation 25, 27, 53, 75, 77, 123, 143, 224–26, 228–29, 365
cost-push 267
and profit 259
Information 99, 101, 173–74, 193–98, 285, 288, 323, 325–26, 352–53 See also: Prices; Uncertainty
In-kind, payments 41, 42
Innovation 71–72, 326, 355, 356–61
Instantaneous adjustments 326, 356–61
Interdependence 17–19
Interest 237–56
market (loan) rate 244, 260
pure rate 244
rate tables 246–49
Inter-temporal exchange 240–41
Interventionism 179, 209
Inventions 71
Inventories 65, 67
Investment 42–43, 64–68, 77–78, 205–206, 246, 250–51
Invisible hand 34–35, 303
Jacobs, Jane 32n
Jevons, W. S. 268
Joachimsthal, 56
Kirzner, I. M. xx-n, xxii-n
Know-how See: Technology
Knowledge See: Information; Uncertainty
Kolko, G. 371n
Labor theory of value xxiv, 266–67, 269, 270–72
Laizzez-faire xxv, 301–303, 319
“Land” 11
Least-cost principle 138–39
Leeman, W. S. 328n
LeFevre, R. 305n
Legal tender 57
Leisure 10, 65, 68
Liberalism, classical 33–36, 303
Liberty 303
Licensing 329
Liebling, A. J. 308
Life, as value 86
Li’l Abner 9
Limited government 303
Loan rate of interest See: Interest
Loans 242, 246, 251–52
Locke, J. 11
Loss, minimum 96, 97, 108, 202
Maher, J. E. 74
Majority rule 105
Mandeville, B. 33, 106
Marginal costs See: Costs
Marginal revenue 265, 343–46
Marginal utility 90–94, 120–21, 139–40, 169–71
Market, as feedback 195–196
Market power 365–67
Market, price determination 28–29, 179–233, 267–68
Market price, law of 206–209
Market-price system, outlined xxi-xxiv
Market rate of interest See: Interest
Market research 124, 135, 295
Market stability xxii-xxiii
Market structure See: Competition
Mark Twain 106–108
Marx, Karl 30n
Marxism 235, 266–67, 269
See also: Labor theory of value
Matching problem 279–85
Maximization xx, 94–102, 138–39, 194, 239
MC: Marginal costs See: Costs
McCarthy, Charlie 110
McGee, J. S. 328n
McKenzie, R. B. xviii-n
McNulty, P. J. 320n
Means 11, 12
and ends 261, 316–18
limited 9–10, 12, 15
of production 11
Medium of exchange See: Money
Menger, C. 268
Mercantilism 299, 302
Methodological individualism 102–105
Methods of production See: Technology
Minimum losss See: Loss
Minimum reservation price 182–83, 184
Mises, L. von xx, 33n, 103, 239–40
Mismatch See: Matching
Mobility, of resources 322
MOE: Medium of exchange See:
Money Money 25–27, 38–58 See also: Cash balances
abstract 54–57
debasement 48–49, 52
definition 45, 54
fiat 57
forms of 39–40, 45
government role 48–49, 54–58
inflation 226
market origin 47, 49–52, 57–58
medium of exchange 40, 45–47, 56–57
metallic 46–47
paper 57
proper 50, 57–58
silver 39–40, 45, 55, 57
store of value 52 See also: Cash balances
substitutes 57
unit of account 54–57
value of 51–52, 57, 237, 259
weight nature of 55
Moneylender 236–37, 241, 252, 256
Monopolistic competition 331
Monopoly 292–93, 327–29
closed 292–93, 328, 329
open 328–29
public utilities 292
Montaigne dogma 33, 35
Morality xiii-xiv, 110–11, 176, 311
Morrison, H. 212
Motivation 94–95, 105
MR: Marginal revenue
MU: Marginal utility
Multipart pricing 344
National income See: Income
National interest 104
Necessities See: Needs
Needs 85–87
Neurotic 108
New money 25–27
Next time around 199, 201, 205
Non-price determinants of demand 118–24, 125–26
Non-profit firms 207, 209–212
Non-specific resources 276
Non-violence 34 See also: Morality
Normal rate of profit xxv, 359
Novak, M. xv-n
Oil, demand for 162
Oligopoly 329–31, 332
OPEC 188–90
Open markets See: Free market
Oppenheimer, F. 4, 6–7
Opportunity cost See: Costs
Optimal decisions 208
Out-of-pocket costs See: Costs
Overhead costs See: Costs, fixed
Over-pricing 186–87, 253
Over-production 196
Overtime pay 204
P: Price(s)
Pain and pleasure 108
Paradox of value 88–89
Payments-in-kind 41, 42
PC: Perfect competition
Percentage approach (elasticity of demand) 177–78
Perfect competition, critique of See: Competition
Perfect elasticity of demand See: Demand, horizontal
Physiocrats 301
Place-utility 61–62
Planned sales period 186, 191–92
Political means xvii, 7
PPM: Purchasing power of money See: Money, value of
Precautionary pricing 228–29
Preference 82–85, 100
Preference-scale 84–85, 165–68
Premium loan 247
Premium value 241–42, 244
Present discounted value See: Discounted value
Present goods 240
Price controls 228–29
Price-cutting 146, 147–49, 201
Price deflation 221–24 See also: Deflation
Price-elasticity of demand See: Demand, elasticity of
Price inflation See: Inflation
Price, labor theory of See: Labor theory of value
Price line 338, 345
“Price of money” 244–46
Price-setting by firms 23–25, 73, 78–79, 183–84, 257–59
Price-spread See: Profit margin (rate)
Price-takers 337–39, 347–50, 366–67
Price trends 221–26
Prices, as information 28–29
as reflector of scarcity 24, 30
changes in 212–27
determination by market 29, 179–233, 266–68
and profits 257–59
of stock-shares 264
Private property See: Property rights
Producers’ goods See: Capital goods
Product differentiation See: Differentiated product
Production 3–4, 5, 11, 14, 15, 20–23, 59–80
and income 18–21, 24, 74–78
capacity 203–204, 342
direct-use 14–16 See also: Crusoe
“for use” 290
process 235–37
Productivity 32, 68–70
Profit 23, 68–70, 78, 146–47, 172–73, 176, 235–60, 267–68, 269–70, 290–91
and-loss system 289
and wealth 264–65
as opportunity cost 256
calculation 251–60
differentials 359–60
entrepreneurial 256–59
inflationary 256–57, 259
maximization 176, 334, 340–51, 363
normal rate xxv, 359
perspectives on 235
squeeze 146
under socialism 290–91
Profiteering 172, 173–74, 176, 193, 203, 205, 210–12, 227–29
Property rights xxv, 303–11
Protectionism 207, 302–303, 370–72
PSP: Planned sales period
Public goods 284–85
Public utilities See: Monopoly
Purchasing power of money See: Money, value of
Pure interest See: Interest
Q: Quantity; Quantities
Qd: Quantity demanded
Qd versus TR 154
Qs: Quantity supplied
Quality of life 86
Quantity-adjuster 349–50
Quantity demanded 117–24
Quantity supplied 182 See also: Supply
Queuing 210
Radford, R. A. 40n
Redistribution 109–11
Regret 98–101
Representation 104–105, 288
Research and development 71
Reservation prices 182–83, 184
Resources See: Means
Resting on laurels 199–200
Revealed preference 85
Risk 206
Roberts, P. C. 14n, 30n
Robinson Crusoe See: Crusoe
Rose Bowl 209–10
Rothbard, M. N. xiv-n, xvii-n, xxiii-n, xxiv-n, xxvi-n, 39n, 58n, 84, 310n
Rush, Tom 97
Russell, Nipsy 75
S: Supply
Saving 42–43, 53–54, 64, 65–67, 246, 249–51
and investment See: Investment
Scalping, tickets 210–12
Scarcity xvii, xviii, 9–15, 81–102
absolute 13
artificial 364
and choice 81–102
relative 13
ultimate cause 83
Schlick, Count 56
Schumpeter, J. A. xxvi-n, 71, 368
Self-employed 20
Self-interest xx, 33, 34–35, 105–13
Selfishness See: Self-interest
Self-ownership 310
Self-sacrifice See: Altruism
Self-subsistence See: Direct-use
Shakespeare, W. 93
Share prices 264
Shifts of demand See: Demand
Shifts of supply See: Supply
Shortages 186–91, 192–93, 198, 202–206, 216, 224–28, 227–29, 231–33, 258
Short-run 342
Silver money See: Money
Sirkin, G. xxiii
Slichter, S. 71
Smith, A. xxv, 32–35, 88, 279, 302, 303
Socialism xv, xxv, 30n, 284–85, 290–92, 298, 304–11
and consumer, 298, 304–11
Socialist planners 284
Society 2, 102–103
Sovereignty, consumers’ See: Consumers
Soviet Union 13, 304–309
constitution 305–309
Sowell, T. xiii-n, 285n
Specialization See: Division of labor
Specific resources 276
Speculation 43, 73, 202, 210
Spoiling the market 343–44, 345
Stephenson, M. A. 14n, 30n
Storage See: Time-utility
Store of value See: Money
Subjective value xxi, 63, 84–85, 87–94, 119–21, 165–66 See also: Preference-scale
Substitutability 337
Substitute products 121–22, 157–62
Substitution 83
Substitution effects 136–37
Subway fares 160–62
Sunk costs See: Costs, fixed
Supply 23–24, 180–84, 229–33
based on production 59–80
ex-ante 229–33
ex-post 180–84, 229–33
shifts of 213–14, 216–17, 218–21
Surplus 186–87, 190–91, 192, 196, 200–202, 218, 231–33
Taxation 7, 25
TC: Total costs See: Costs
Techniques of production See: Technology
Technological progress 63, 68–72
Technology 60, 63–64
and profits 69–70
“Thaler” 56
Theft 3, 5
Time and production 235–37
Time horizons 250
Time-lags 360
Time-preference 62, 94, 237–51, 273
Time scarcity 83, 238
Time-utility 62
Totalitarianism 13
Total receipts 146–51, 154, 343–44
Total revenue See: Total receipts
Total utility 93–94
TR: Total receipts; Total revenue
Trade 36–38, 101–102 See also: Exchange
Trade unions 364
Transfer payments 25, 26
TR schedule 150
TR versus Qd 154
TU: Total utility
Tullock, G. xviii-n
Twain, Mark 106–08
Uncertainty 25, 29, 30, 43, 60, 72–73, 100, 151, 152, 194, 206, 256–59, 260–61
See also: Entrepreneurship; Information
Underpricing 186–88, 209–12
Unemployment 275
Unit of account See: Money
Unit costs See: Costs
Use-value See: Utility
USSR See: Soviet Union
Usury 235
Utility 60–63, 93
Utility, total 93–94
Utopians xii
Value See: Labor theory of value; Exchange value;
Subjective value; Use value
Value of money See: Money
Value, paradox of See: Paradox
Variable costs See: Costs
Variation, geographic 36–37
human 36–37
VC: Variable costs
Voluntary exchange 4, 111
Voting, political 314n
Wage-income, source of 269–73
Wage-increases 146, 228
Wage-price controls 228–29
Wage-rate determination 273–75
Waiting lines See: Queuing
Wants 10–11, 27, 81–82, 115, 314–16
absolute 85–87
unlimited 9–10, 15, 81–83
Wealth effects 264–65
Western economies 12
Whole man 82
Wicksteed, P. H. xx-xxi, 268
Williams, W. E. xiii-n
Withholding of supply 202
Work 3–4, 5, 10
Workers’ control 272–73
Working back from price 78–79, 266, 268
Xenophon 31–32
