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SECOND RULE OF SUBJECTIVITY: The second of seven basic rules of the economy. It is the notion that market prices are ultimately determined by subjective values and preferences of buyers and resource owners. While regular, everyday consumers are prone to accept the prices "set" by retail stores and other sellers as etched in stone (perhaps along with the Biblical ten commandments), such is not the case. The price of a product depends on two things, demand (especially the demand price that buyers are willing to pay) and supply (especially the supply price that sellers are willing to accept). Both, I repeat both, are subjectively determined. By subjective, I mean they are based on the values, beliefs, tastes, and preferences of people.
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INFLATION PROBLEMS Two notable problems are associated with inflation--uncertainty and haphazard redistribution. Inflation, especially inflation that varies from month to month and year to year, makes long-term planning quite difficult. Prices, wages, taxes, interest rates, and other nominal values that enter into consumer, business, and government planning decisions can be significantly affected by inflation. Moreover, inflation tends to redistribute income and wealth in a haphazard manner--some people win and some people lose. This redistribution might not be that desired by society, failing to promote any of the basic economic goals of efficiency, equity, stability, growth, or full-employment.
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BROWN PRAGMATOX
[What's This?]
Today, you are likely to spend a great deal of time going from convenience store to convenience store trying to buy either a cell phone case or a pair of designer sunglasses. Be on the lookout for neighborhood pets, especially belligerent parrots.
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The portion of aggregate output U.S. citizens pay in taxes (30%) is less than the other six leading industrialized nations -- Britain, Canada, France, Germany, Italy, or Japan.
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"A man is not finished when he is defeated. He is finished when he quits. " -- President Richard Nixon
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ACBS
Accrediting Commission for Business Schools
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