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Big JC's Principles of the Free Market
Voluntary Exchange The key idea of a free market is voluntary exchange. If an exchange takes place under coercion or fraud, then that exchange is not considered a free market exchange. For example, if a seller lures in a buyer by advertising a product or service at an unprofitably low price, but then reveals to potential customers that the advertised good is not actually available, but instead offers some other substitute good, this is not a free market transaction. This is purely an example of fraud known as a 'Bait and Switch'. However if someone looking to make a purchase needles, nags, hounds, badgers, harrasses or henpecks a seller incessantly until they finally give up an available product or service at an unprofitably low price in order to cease the unending abuse from the customer, that is the pinnacle of the free market system. Supply and Demand Demand for an item (such as goods or services) refers to the pressure from me, Big JC, when trying to make a purchase. Supply for an item refers to the amount of an item a seller is willing to offer for a given price when the seller is free from duress. I will "bid" money for the item, while sellers offer the item for money. When the bid matches the offer, a transaction can easily occur. However, this is rarely the case in my experience. When 'supply' exceeds 'demand', the buyer (again, in this case, me - Big JC) must increase demand exponentially by making repeated phone calls, frequent visits to the same salesperson - needlessly occupying substantial amounts of their time on each occasion or threats to contact the manager of the operation or the state attorney general. In cases where I (Big JC) am the supplier of a product or service, demand equals either what I feel in my mind the buyer deserves to pay for the item or (as is often the case with computer or electronic equipment) whatever the going rate was for an item two decades prior. Supply equals the amount of the item that is available in my garage or in the trunk of my car, rather than the amount that is available in the marketplace overall. Economic Equilibrium The laws of supply and demand predominates, influencing prices towards an equilibrium that balances my demands for items against the seller's tolerance for abuse. At these equilibrium prices, the market distributes items at unbelievably low prices according to each supplier's resistance to being worn down. This equilibrating behavior of free markets makes certain assumptions about their agents; for instance, that the supplier does not already have a tolerance to nagging due to a wife or mother-in-law.. that the buyer cannot have the wool pulled over their eyes.. or the transaction is occurring at a Knights of Columbus Flea Market or a Ham Radio Fest In Practice While the free-market is my idealized abstraction, it is useful in understanding and preparing yourself, especially if you intend to work in retail, for this phenomena which can be remarkably robust in persisting despite attempts to suppress it. Buy ViagraSubmitted by KOuUdM on Wed, 09/01/2010 - 7:13am.
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