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Mises Academy Basics of Economics: The Free Market

Mises Academy Basics of Economics: The Free Market. Robert P. Murphy February 20, 2014 Lecture 7: Profit & Loss Accounting. Profit & Loss Accounting. I. Tom Woods Show! II. Prices Guide Production Hayek Actually Price DIFFERENCES Tendency vs Absolute Move. III. Interest vs. Profit

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Mises Academy Basics of Economics: The Free Market

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  1. Mises AcademyBasics of Economics:The Free Market Robert P. Murphy February 20, 2014 Lecture 7: Profit & Loss Accounting

  2. Profit & Loss Accounting I. Tom Woods Show! II. Prices Guide Production Hayek Actually Price DIFFERENCES Tendencyvs Absolute Move • III. Interest vs. Profit • IV. Social Function • Gold Apartment? • Misesian Vision • V. Limits of Economic Calculation (P&L stmt)

  3. Tom and I discuss issues of profit/loss in this interview. http://www.youtube.com/watch?v=HXw8DaxE9fM I. Tom Woods Show!

  4. II. Prices Guide Production

  5. A. Hayek’s Work

  6. It’s not that prices guide entrepreneurs so much as (expected) price differences. B. Price DIFFERENCES

  7. There are tendencies in the market for profits and losses to be whittled away, but data are constantly changing. Also, producers aren’t “forced” to follow consumers’ spending patterns. C. Tendency vs. Absolute Move

  8.  Even in equilibrium, it’s NOT TRUE that revenues = expenses. There will always be a “markup” that layperson would call “profit.” III. Interest vs. Profit

  9. IV. Social Function of P&L

  10. A. Gold Apartment?

  11. B. Misesian Vision

  12. V. Limits of Economic Calc.

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