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On Liberty

"Rightful liberty is unobstructed action according to our will within limits drawn around us by the equal rights of others. I do not add 'within the limits of the law' because law is often but the tyrant's will, and always so when it violates the rights of the individual."

--- Thomas Jefferson


Lesson 67 - Profit and Exchange Print E-mail

 

It is the "more factor" that induces exchange.  The exchange will happen only when the seller wants the sum of money offered more than he wants his product, and when the buyer wants the product more than he wants the sum of money he offers.

The "plus" (more) factor is what is also known as "profit". 

Each participant in an exchange will recieve some sort of added value (value as they perceive it at the moment).  In other words, each participant in a voluntary exchange will profit from it, in one way or another.

For example, a seller offering a hat for sale for $50 is saying in effect, "I have more hats than I have $50 bills.  I would rather have one less hat and one more $50 bill."

For his part, the prospective purchaser of the hat is saying in effect, "I have more $50 bills than I have hats.  I would rather have one less $50 bill and one more hat, for the percieved value (to me) of owning such a hat, or for the functional value of that hat in keeping my head warm and the sun out of my eyes, is worth more to me at this moment than continuing to possess the $50."

This is an example of economic profit.

Economic profit may exist even where dollar losses occur. 

For example, it may be considered economically profitable for Jones to exchange X for Y, if he (Jones) values Y more than he does X.  As far as Jones is concerned, he is better off after the trade than he was before.  In other words, he has profited.

 



 
 

Fundamentals of Liberty

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