Adam Smith's invisible hand and equilibrium.

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KissMyAss
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Joined: Wed Sep 21, 2011 10:55 am
Location: Oregon

Adam Smith's invisible hand and equilibrium.

Post by KissMyAss »

Here is the system of pricing

Equilibrium is the happy place in which the consumer and a seller are both satisfied with the cost/profit of a good.

What happens when the government taxes goods?

A retailer buys from a warehouse. Before taxes, the retailer is charging a competitive price that attracts the customer. After the sales tax, the retailer must pay extra. Then the consumer pays extra. The amount of money taken preventing both parties from being satisfied with the transaction is known as deadweight loss. The government is usually responsible for the "deadweight" :lol: :lol: :lol: :lol: :lol:

So let's see how collectivism, or the common good affects our daily transactions. Your television goes out. You shop around, the bigger screen $228 tv seems too extravagent and $178 is the price you want to pay. Nothing fancy, not much of a television connoisseur. A small screen Phillips will do the trick. If you are living in California, you pay a 7.25% sales tax (although promised to fund education, the funding never quite makes it). You pay an $8.00 recycling fee, as well, for the good of the environment. But you've paid $198.91 for a tv worth $178.00 to you. For an extra $20 you might have gotten a bigger screen, but actually you paid $20 over the equilibrium price for nothing. Truly a $20.91 loss. The losses could add, purchasing a new computer at approximately $65, approximately $15 for an iphone, About $58 for a Gibson Les Paul, or perhaps $1,500 for a car. And let us not forget your clothes, your furniture, hygenic needs, and in some cases labor costs.

So this invisible hand;

Government interference in sales transactions= a loss to the butcher, the baker, the consumer, etc..is proven. Through sales tax, you pay more to the government, and have less money to purchase goods. The retailer is also charging higher prices, as well, to make a profit. Without this interference, you would be able to buy more. Producers and sellers of goods would compete to please the consumer, and you would get the deal. And it would improve the economy, too. :wink:


Live life as though it is the third law; "to every action there is an equal and opposite reaction." Rules apply whether we are cognizant of them or oblivious.
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