Mises AcademyAustrian Econ I:

Praxeology Through Price Theory

Robert P. MurphySpring 2011

Lecture 6June 1

2nd half Chapter 3

1. Balance of PaymentsII. Stages of ProductionIII. Refine to Include ProductionIV. Tendencies

V. “Nonexchangable” Goods VI. Allocate By Marginal Utility VII. Where Do Good Come From?

I. Balance of Payments

Money Income = Money Expenditures + Net Additions to Cash Balances

OR

Exports = Imports + Net Additions to Cash Balances

A. Makin’ Money

B. Timeframe Matters

C. All Transactions Voluntary

II. Stages of Production

III. Refine to Include Production

Money Income = Consumption Expenditures + Investment Expenditures + Net Additions to Cash Balances

� A producer strives to maximize net business income, but not necessarily overall net income.

IV. Tendencies

Laborers will take positions offering highest wages, investors will seek opportunities offering highest rate of return, and buyers will seek out the cheapest price for a good…

…other things equal.

V. “Nonexchangeable” Goods

VI. Allocate By Marginal Utility

VII. Where Do Goods Come From?