Economics
KEY THINKER
Friedrich von Wieser (1851–1926)
BEFORE
1817 David Ricardo argues that the value of a commodity is determined by the amount of labor hours used to produce it.
AFTER
1920 Alfred Marshall argues in Principles of Economics that both supply and demand have a role in determining price.
Modern complex economies involve the interactions of large numbers of people and organizations. These economic agents fall into one of three categories: business, households, government, and the rest-of-the-world. Economists find it useful to think of these groupings as sectors of the economy. Let's look at each of these sectors in turn:
Economics is the study of the market economy. The market economy refers to an abstract image of interaction among purposeful, "normal human beings," or actors, under a given set of conditions. The set of conditions are four:
- a system of private property rights,
- specialization,
- the use of money
- free enterprise.
The assumptions of Marshall’s model create certain consequences for firms in perfectly competitive industries. One of the most important of these is that firms have no power over the price that they can charge. This is because there are so many firms selling an identical product that if any one firm attempts to sell at a price higher than its competitors, it will sell nothing.
The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent in September on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index rose 1.5 percent before seasonal adjustment.
Increases in the shelter and gasoline indexes were the main causes of the rise in the all items index. The gasoline index rose 5.8 percent in September and accounted for more than half of the all items increase. The shelter index increased 0.4 percent, its largest increase since May.