By: Sterling Terrell
Prices can increase through less supply, more demand, or monetary inflation.
Prices can decrease through more supply, less demand, or monetary deflation.
Cost has nothing to do with price, other than to say: If it costs more to make something than it can be sold for, it does not get made.
Absent intervention and fraud, losses are a signal of what people don’t want.
Subsidizing something gets you more of it.
Taxing something gets you less of it.
The more you have of something, the less you value it.
The division of labor increases output.
$2 in one country is not the same as $2 in another.
By definition, people are not systematically paid more or less than they are worth.
Sometimes increasing tax rates increases revenue to the government.
Sometimes decreasing tax rates increases revenue to the government.
Effective monopolies are rare. There is almost always an alternative.
Effective cartels are rare. The incentive to cheat is enormous.
If the price of hot dogs increases, people tend to buy fewer hot dog buns.
If the price of oranges increases, people tend to buy more apples.
Most assets are worth approximately the present value of their anticipated future cash flows.
A business going bankrupt is not a scary thing. A change in ownership is all that is taking place.
Interest rates come from consumption preferences. Sooner is better—and interest rates arise to delay that consumption.
When not blinded by politics, economists are good at determining cause and effect.
Economists are terrible at prediction. Please stop asking them to do it.
First published by Thought Catalog.