Type:

Video

Description:

If you want to do good for the world, Prof. Michael Munger has a piece of advice: Listen to the price system. He compares prices to a genie that knows everything in the world and tell you exactly what goods and services humanity needs most. He tells a story of two hypothetical farmers. One ignores the price system and tries to plant what the world needs most. Overwhelmed by the quantity and complexity of the data needed to figure out what crop is most needed, he eventually fails. The other farmer is selfish and profit-driven. He doesn't understand that the high soybean price reflects increased demand for a new soy-based product in Asia -- he just wants to make money. But by listening to the price system, he produces exactly what the world needs most.

Subjects:

  • Social Studies > Economics

Education Levels:

  • Grade 11
  • Grade 12
  • Higher Education

Keywords:

prices, profit, loss, economics, price system, free market, markets, knowledge problem

Language:

English

Access Privileges:

Public - Available to anyone

License Deed:

Creative Commons Attribution 3.0

Collections:

None
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