Class summary 11/18

We cannot allocate goods effectively by who needs more.

We do not realize the full cost of the water, so people keep wasting water.

Nobody needs to figure out how to use water properly because the price does it all.

Price system forces you to value things

If the price of water increases, it provides incentive of supplying and demanding the water

Without price, there’s no way to ensure who needs one thing more than another.

There are some goods that are not distributed by price but allocate well ( not leave it to the market)

How do you determine who gets what in health care?

Equal access of health care is a joke

eg: health care

    * equal share: not possible/desirable

    * better ways than price might make it worse

money changes he nature of transaction (barter, spend time finding the right person)

money makes:

   1. "double coincidence," allows exchange

   2. divisible &aggragable

-->lowers transaction cost