Prices, Costs, and the Gains from Trade

Steven E. Landsburg

Chapter 2 in Price Theory and Applications, 2024, pp 37-51 from World Scientific Publishing Co. Pte. Ltd.

Abstract: Now that we’ve talked a bit about buying and selling, it’s time to pause and ask why people buy and sell things in the first place. Put more succinctly, the question is: why do people trade?The answer is twofold. Sometimes people trade because they have different tastes. That ceramic teapot you inherited from your grandmother — the one in the shape of a smiling pig — might seem to you like a piece of junk and to someone else like a charming piece of American folk art. By listing the smiling pig on eBay, you can locate that someone else and make a trade that leaves both of you happier…

Keywords: Microeconomics; Price Theory; Supply and Demand; Demand Curve; Adverse Selection; Budget Line; Indifference Curve; Common Property; Competition; Competitive Industry; Constant-cost Industry; Consumer Surplus; Producer Surplus; Social Gain; Social Welfare; Efficiency Criterion; Economic Efficiency; Cost; Price; Deadweight Loss; Price Ceiling; Tariff; Rationing; Quotas; Equimarginal Principle; Price Discrimination; Monopoly; Two-part Pricing; Two-part Tariff; Fishery; Collusion; Income Effect; Substitution Effect; Normal Good; Inferior Good; Giffen Good; Externality; Property Right; Coase Theorem; Transactions Cost; Law of Demand; Marginal Cost; Marginal Revenue; Marginal Value; Market Failure; Moral Hazard; Nash Equilibrium; Normative Criterion; Positive Economics; Oligopoly; Hayek; Social Cost; Economics of Information; Sales Tax (search for similar items in EconPapers)
JEL-codes: D D04 D4 L11 (search for similar items in EconPapers)
Date: 2024
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