· Transaction Costs
o People trading property rights to an object, place, or thing
o TCs are costs for the buying and selling of such property rights
o Anything that prevents beneficial transactions from taking place
o Middlemen: Has a comparative advantage in lowering transaction costs for customers and producers
§ Brings buyers and sellers together
§ Example: Wegmans
o It’s hard outside of a small group to understand what people want
§ How do you overcome distance barriers outside of a small society?
· Prices are signals to buyers about what is scarce
o Steer knowledge and resources in a way that markets emerge
· Market: any groups of potential buyers and sellers
o Any decentralized, unorganized interaction between buyers and sellers
· What is the outcome of a market?
o 2 emergents:
§ 1) Production of many prices
or
§ 2) Nonmoney price
§ ^Produces order)
o Nonmoney prices:
§ Health care may be free in some countries
· Markets
o Buyers are demanders
o Sellers are suppliers
o Conditions to be met for markets to work well
§ Fast
§ Heterogeneous
§ All must be ubiquidous
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