Price Read Count : 125

Category : Books-Non-Fiction

Sub Category : History
There is a reason why something costs the amount it does. Many philosophers try to understand why, but this is why there philosophers not economists. Vaule is suggestive. The seller chooses a price to sell at, and the buyer chooses whether or not it's a fair price. 

One of the main factors is supply, and demand. How many people are selling that product, what's the quality, and what's the price. If nobody else is selling that item, and it's very important, then the seller can charge what they like. If there the only seller, but it's not important, then they must charge a price that the buyer can agree on. If there are no other buyers, and the seller wants to get rid of it, then the seller has to sell it for what the buyer wants. If the you're the only buyer, but the seller doesn't want to give it away, then you need a price the seller can agree on. 

Another important factor is knowledge. If one party is uninformed, then it effects the price. If you don't know how important this item is, then you may make up a price that the other can't agree on. There can also be misinformation about what the supply is. If the buyer believes there only 1 seller, but the seller knows there are 50 sellers each one with better quality, both would take the first deal they can get. If the buyer believes that there are 50 sellers with better quality, but the seller knows he has the highest quality, then both are expecting the better end of the deal. Information is very important when making choices. 

Some people believe vaule isn't suggestive; however this is wrong. Let's say some trades a car for a bike, it seems like a bad trade, but when you add context it seems more reasonable. Let say the car can only go for another mile, and the nearest city is 3 miles away. It then seems like a worse deal for the guy who owns the bike. Now let's say that the guy who owns the car owns another car at home. At first it seems like the car owner had the worse deal, but now it looks like the bike owner had the worse deal. Now lets say the bike owner can turn a mile of gas into 6 miles of gas. Now the deal seems fair. This proves that vaule is suggestive.

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  • Apr 22, 2020

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