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Pastimes : Austrian Economics, a lens on everyday reality
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To: Don Lloyd who wrote (274)11/15/2003 11:18:19 PM
From: Wildstar  Read Replies (1) of 445
 
Don,

No, this is wrong. There is no proportionality.

For an infinite price, there will be no demand, but a very large potential supply. For a zero price, there will be no supply, but a very large potential demand.

At some price in the middle, supply will approximate demand and this will be the market price.

At the market price, there will always be a marginal buyer and a marginal seller.

*slaps forehead* Of course, just like in the 'regular' market.

So, the mechanism behind how prices for non-specific factors of production are 'imputed' from the price of consumer goods those factors help create is that the marginal buyer of the non-specific factor of production must pay a low price for the factor in order to stay solvent?

Is the marginal buyer of the factor of production also the marginal seller of the consumer good?
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