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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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SELLERS' EXPECTATIONS, SUPPLY DETERMINANT The expectations that sellers have concerning the future price of a good, which is assumed constant when a supply curve is constructed. If sellers expect a higher price, then supply decreases. If sellers expect a lower price, then supply increases. Sellers' expectations are one of five supply determinants that shift the supply curve when they change. The other four are resource prices, production technology, other prices, and number of sellers.
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BLUE PLACIDOLA
[What's This?]
Today, you are likely to spend a great deal of time flipping through the yellow pages wanting to buy either a pair of blue silicon oven mitts or a coffee cup commemorating the 2000 Olympics. Be on the lookout for door-to-door salesmen.
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One of the largest markets for gold in the United States is the manufacturing of class rings.
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"Managing intellectual assets has become the single most important task of business. " -- Thomas Stewart, author
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NIFO
Next In First Out
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