Nature of Competition: Thinking at the Margin

 

We come into being with certain boundary conditions:

1)     Our time in Here is limited to 125 years. Therefore, we have to economize on time before all else. In other words, “Saving Private Time” (T) is it all through life.  

2)     We have a life cycle of introduction, growth, maturity and decline. We in the introduction cycle largely rely on parents. On the contrary, we since the growth and on have to rely on the human and physical assets to which we are entitled; for the purpose of creating utilities for the sake of sustaining and pleasing the family on one hand; for the other goal of investing in assets for the future, for longer or for shorter, on the other hand. Economizing on the assets (M∙U) is the other key all through life.

                           All in all, the largest bang for the buck is the economy (M∙U∙T^-1).

3)     The needed for subsistence may relatively limited, but the desired for pleasures are absolutely and positively unlimited.

              There in our lexicon is no such thing as “ineffective demand.”   

4)     Due to the limited physical, physiological and psychological capacities, we must consume a particular kind of utility step-wise, or a unit (M∙U) after another, and that over one time (T^-1) after another.  

5)     Each good or service renders a unique kind of utility. By providence, the utility of the unit at the margin of decision making declines as we increase the total units of consumption. Blessed, we when in a meal, for instance, get sick way before consuming too much meat, bread or beer.

              It’s the butchers, bakers and brewers in aggregate that are to blame for any aggregate supply (“AS”) all by itself failing to find the partner (AS> AD). The same groups are liable to secular stagnation, as well. For sake of avoiding the conviction of  “intellectual dishonesty,” that’s the way it is,

 

Home life. We cannot have the cake and eat it, too. Another aspect of this popular maxim is that we do a thing, such as eating, after another, such as securing the entitlement, for the purpose of consumption or production.

             Suppose any of us is about to consume quarter-sliced apples and half-sliced oranges on the dish. As she keeps taking the apple the taste of marginal slice decreases relatively to the first slice of orange. At the moment the marginal benefit of apple is headed below the expected marginal benefit of orange, she switches the consumption to the orange. 

              Likewise, her daily life goes on. She wittingly or unwittingly balances all kinds of marginal utilities named as at the hour of time. In this sense, she is in equilibrium among utilities relevant to the hour of the day. She, a non-macroeconomist, does not care about the moment of time while staying in Here. Minding the inexistent (T⁰) equals ditching the invaluable time in the drain (- T¹).

             She the math-maniac loves calculus, but she never differentiates or integrates the apple or the orange for fear of being thrown into the sea or Wonderland. Incidentally, she as for a service does consumption and production at the same time.

             For instance, she when in a good mood produces and consumes beautiful songs at the same time. As it were, she becomes another Sissel Kyrkjebø in front of herself or by herself. She in the meantime never minds if the practice of hers is called “leisure” or “waste of time.” Further on, she has no intention to purchase anything out of “AS” in “real quantities” (M) with no name of value. 

 

A price in the market. There are two kinds of price in the market of the community: a price for each and the price for all; the former regards the present period while the latter bears upon the following period.

             All trade in economics takes place in the market per community per accounting period. The other way around, to be precise: The market is definitely conceived as an imaginary venue wherein exchanges are assumed to be made between third parties at the mediation of legal tender. The cycle of purchase to consumption of each is ideally unified for the purpose of abstraction: for instance, a week for the grocery shopping and a fortnight for the wage negotiation.   

             Each on the demand side represents a family of four consumers while each on the supply side represents one to so many households as owner. The shopper, Mom or Dad, when stepping in the mart has tens of items including the apple and the orange in mind for the coming week. Needless to say, he in the mart is rational and always thinks at the margin.

             First round, all things considered he goes to the mart among other free choices. With the choice gone history, he does not have a control over prices in terms of the currency unit (U∙m) of, say, the apple pack and the orange pack (each in M∙U) on the shelves. He does not have any control either on the marginal utilities of items including the apple and the orange of the family of four over the coming week.

             At any rate, we in economics know for sure that (M∙U)_A@m= P_A and (M∙U)_O@m= P_O, where “m” for margin. Solving the equation of grocery shopping he can come up with the quantity per item for the week. As the mart shows different prices in the following week, his shopping portfolio will change accordingly. See we told you, “the only equilibrium is change.”

             Apparently, Most prices are more plausibly than not different a week after another (T^-1). Where there is no period of accounting, there will be no theory of economics until Eternity. It's the accounting period, in fine. 

 

The price for all.

Abba - Hasta Manana