Introduction Markets and Prices in Everyday Life All living ­ things develop ways to produce and consume what is needed to sur- vive, yet as far as I know only ­humans use markets and prices as a way to do this. I expect that you spend a good part of most days dealing with markets and prices, but I am just as certain that the bumblebees, robins, and maple trees outside your win­dow do not devote a speck of energy to the task. As a result, we are constantly dealing with issues that markets create. In a typical day you may won­der why your favorite candy bar varies so much in price between the vending machine down the hall and the local grocery ware­house, why your new car lost more than 10 ­ percent of its value the instant it was driven off the lot, and why your home team superstar is paid extraordinarily more than less talented peers. The reason we choose to take on the issues cre- ated by markets and prices actually seems to be a ­ simple one, and a good way to see it is to think about that purest of all con­temporary American markets, the weekend yard sale. Imagine it is a beautiful Saturday and your neighbor has told you that she is ­ going to have a yard sale that day. She has cleaned out her garage and closets, dragged her old trea­sures to the driveway, and put tempting prices on the items for passersby to sort through. You decide to take advantage of her planning and effort and to put a few items of your own out on your front lawn. It gives you a chance to sort through the dross in that hall closet you ­haven’t dared look into for the past five years and create some much needed storage space. While setting your ­ things out, you, of course, go see what your neighbor has to offer, and she takes a look at your offerings as well. Assume you see a set of four books she has put out for sale that you would ­really like to read.
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