Anatomy of the Fed, Lecture 3 with Robert Murphy - Mises Academy
Production and the Market Process, Lecture 1 with Robert Murphy - Mises Academy
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Transcript of Production and the Market Process, Lecture 1 with Robert Murphy - Mises Academy
![Page 1: Production and the Market Process, Lecture 1 with Robert Murphy - Mises Academy](https://reader033.fdocuments.in/reader033/viewer/2022060200/5598a6631a28ab7e638b4670/html5/thumbnails/1.jpg)
Production & the Market Process
Robert P. MurphyMises Academy
July 20, 2011
Lecture 1: Chapter 5 of Man, Economy, and State
![Page 2: Production and the Market Process, Lecture 1 with Robert Murphy - Mises Academy](https://reader033.fdocuments.in/reader033/viewer/2022060200/5598a6631a28ab7e638b4670/html5/thumbnails/2.jpg)
Chapter 5 of MES1. Course Description
2. Review: Supply of a Good
3. The Evenly Rotating Economy1. Definition2. Analytical Function3. Problems
IV. Mathematical Econ
1. Versus Verbal2. Causality vs. Mutual
Determination
V. Assume Completely Specific Factors
VI. Assume Joint Ownership
![Page 3: Production and the Market Process, Lecture 1 with Robert Murphy - Mises Academy](https://reader033.fdocuments.in/reader033/viewer/2022060200/5598a6631a28ab7e638b4670/html5/thumbnails/3.jpg)
I. Course Description
![Page 4: Production and the Market Process, Lecture 1 with Robert Murphy - Mises Academy](https://reader033.fdocuments.in/reader033/viewer/2022060200/5598a6631a28ab7e638b4670/html5/thumbnails/4.jpg)
II. Review: Supply of a Good
![Page 5: Production and the Market Process, Lecture 1 with Robert Murphy - Mises Academy](https://reader033.fdocuments.in/reader033/viewer/2022060200/5598a6631a28ab7e638b4670/html5/thumbnails/5.jpg)
III. Evenly Rotating Economy
![Page 6: Production and the Market Process, Lecture 1 with Robert Murphy - Mises Academy](https://reader033.fdocuments.in/reader033/viewer/2022060200/5598a6631a28ab7e638b4670/html5/thumbnails/6.jpg)
A. Definition
In the ERE, all “variables” or “parameters” that affect economic outcomes are held fixed. Subjective preferences, resource supplies, technological know-how, population, are all constant.
In the ERE, things “change” in the sense that raw materials are transformed into retail goods, which are then consumed. But the whole cycle predictably ends where it first began.
![Page 7: Production and the Market Process, Lecture 1 with Robert Murphy - Mises Academy](https://reader033.fdocuments.in/reader033/viewer/2022060200/5598a6631a28ab7e638b4670/html5/thumbnails/7.jpg)
B. Analytical Function of ERE
●Abstracts away from change and allows economist to focus on the equilibrium relationships (e.g. wages exactly equal to marginal product, etc.)
●Crucially distinguishes between interest and profit. (Capitalists earn interest, but entrepreneurs do not earn pure profit, in the ERE.)
![Page 8: Production and the Market Process, Lecture 1 with Robert Murphy - Mises Academy](https://reader033.fdocuments.in/reader033/viewer/2022060200/5598a6631a28ab7e638b4670/html5/thumbnails/8.jpg)
C. Problems
●No reason to hold money, yet we use ERE to discuss money price.
●Action depends on uncertainty, yet complete certainty in ERE.
![Page 9: Production and the Market Process, Lecture 1 with Robert Murphy - Mises Academy](https://reader033.fdocuments.in/reader033/viewer/2022060200/5598a6631a28ab7e638b4670/html5/thumbnails/9.jpg)
IV. Mathematical econ
![Page 10: Production and the Market Process, Lecture 1 with Robert Murphy - Mises Academy](https://reader033.fdocuments.in/reader033/viewer/2022060200/5598a6631a28ab7e638b4670/html5/thumbnails/10.jpg)
A. Versus Verbal
![Page 11: Production and the Market Process, Lecture 1 with Robert Murphy - Mises Academy](https://reader033.fdocuments.in/reader033/viewer/2022060200/5598a6631a28ab7e638b4670/html5/thumbnails/11.jpg)
B. Causality vs. Mutual Determination
![Page 12: Production and the Market Process, Lecture 1 with Robert Murphy - Mises Academy](https://reader033.fdocuments.in/reader033/viewer/2022060200/5598a6631a28ab7e638b4670/html5/thumbnails/12.jpg)
V. Assume Completely Specific Factors
![Page 13: Production and the Market Process, Lecture 1 with Robert Murphy - Mises Academy](https://reader033.fdocuments.in/reader033/viewer/2022060200/5598a6631a28ab7e638b4670/html5/thumbnails/13.jpg)
VI. Assume Joint Ownership
Workers and natural
resource owners have
to wait for revenue from
sales!