Nature of Competition: Accounting for the Product Market 02
We recall the apple market from the
previous blogpost: ①the
exactly-same unit of Golden Delicious is the
product; ②the
market is conceived for the community;
③the period for the sake
of accounting is the year. Without
the three names, the market would become indefinite, irrelevant, meaningless, useless,
redundant, or just fun at best.
The
medium of exchange in classical times was almost always in forms of legal tender
such as dollar bills in the US. In
modern times, however, the medium is extremely diverse in “real or virtual identities,”
but always and everywhere “in the name” of legal tender such as the dollar sign ($).
Particularly since the year 1936, real money has been more often than not dispensed with, except for its name being continuously and consistently used. As regards “Money in the 21st Century,” “only the name of legal tender” (U) could not be more preferable to “liquidity in real” (U∙m).
Where is the place for “liquidity preference”? Where is the place for the “real money supply” (M/ P in macroeconomics)? If exogenous to Cambridge, the only place will be the heavens.
Gross communal income. Apparently,
all the rental payments accrue to the communal households as owner of the assets,
human and physical. Then on, the producer surplus is none other than EBT
(earnings before tax) as incomes, retained or distributed, of the owners of the
firm. All in all, the rental incomes and the producer surplus add up to the
cross communal income, which shall by design be equal to the value added per
annum of the firm. Again, the firm represents the whole supply chain.
In
substance, the EBT is from three sources: first of surety, the time value of
money on the historic investment by households of earned incomes in the firm;
second of almost certainty, benefits from an organized creative powers of the firm; third of high possibility,
the return on risk taking or entrepreneurship
as sometimes called. If anyone will, the last two are due to “total factor effectiveness”
(M∙U∙T-1).
Gross communal products. We
for simplicity borrow from Gregory Mankiw and define, “GCP is the market value
of all the apples, which is final by
nature, produced within a community in a given period of time.” We mean with “the
market value” either a price for each apple or the price for all the apples.
Communal Economics. The
General Theory of communal accounting for economic activities per annum: ①by
definition, GCP equals the aggregate supply (AS); ②by naming, the
aggregate demand (AD) is with GCI. the wherewithal; ③finally, GCP equals GCI, partly because the
invisible hand never lets supply or demand cross over the periods.
Quiz at interim.
Do we know a, any or the price ex ante?
The answer depends on whom you ask the question of. The rest of us will never
say “Yes.” Nonetheless, some prominent macroeconomists would claim that “a
fraction of sellers” when “thinking at the margin” be determined to know and “set”
beforehand the price at “EP” (for expected
price level of markets which are known, unknown or known unknown). Icing on the
cake, those sellers are ambidextrous and “set” the quantity as well.
Wunderbar,
Herrn!
Comments
Post a Comment