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Pastimes : Austrian Economics, a lens on everyday reality
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To: Wildstar who wrote (121)9/17/2002 1:27:59 AM
From: Don Lloyd  Read Replies (1) of 445
 
Wildstar,

[[For a consumer in a money-based market economy, the existing market array of the money prices of goods, as perceived, is the primary external factor that determines his subjective ordinal rankings of the comprehensive states of satisfaction achievable through the actions of exchanging money for goods, as well as providing a basis for valuing as future purchasing power the remaining cash balances included in those states. In turn, the exchange actions taken help determine the future market array of the money prices of goods by sequentially removing the chosen goods from the market beginning from the low end of their price distributions.]]

I'm pretty sure I understand - external prices allow the consumer to create his own subjective valuation rankings, and based on his exchange actions (which are based on those prices), new prices are created. It's a loop.

External prices can re-arrange his rankings, not allow.

Some people believe that market prices are a measure of value. This is disproved by the fact that lower prices of some goods, lower market 'values', increase the rankings, and chances of selection, of the states of satisfaction that include those goods instead of higher priced goods.

Regards, Don
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