Hello Avery! I agree with your analysis of the readings. In Bylund’s book, the situation of Adele and her apple orchard helps to understand the theme of what prices communicate. For her to produce apples, she must value something in return or else she would not waste her time, money, and resources on this business. I agree that by using this example, Bylund helps readers understand this concept of prices, value, and scarcity that he was explaining in this chapter. When we think about this, we all do similar things in our day to day lives. We really only do something if it brings us value in return. When we are shopping, we only buy things because we see the value in the product, especially when prices seem a little too high. The more value a product has, the more we are willing to pay for it. You brought up an interesting section of the chapter that I did not really read into that is essential to products. The apple orchard itself is not valuable but is what makes the product valuable. We as customers do not get to see the process behind making the product, so we do not see the value in it. The only thing we care about is the product we are consuming. I feel, however, the process should be more valuable than what it is viewed as. Without it, like the apple orchard, we would not have the products that are important to us, in this case the product is apples. I enjoyed this next section that you mentioned because as a small entrepreneur, I relate to it.

It is thus based on the entrepreneur’s judgment of the future market situation in which the final good will compete with others to satisfy consumer wants. More specifically, entrepreneurs place their bids based on their estimates of what price the final good can be sold for to consumers (Bylund, 2016, p. 35).

When starting a business, you want to be profitable and not go under, so you cannot sell the product for less than what it costs to produce them. If entrepreneurs can predict what their products will be sold for in the future, they have a good understanding of whether they will be profitable or not depending on current costs and product demand. With this, entrepreneurs can also choose their costs to be more efficient to increase profits by lowering production costs with cheaper materials and resources. Bylund is successful in explaining these concepts so that we can apply them to real word experiences.

In the next section of your essay, I completely agree that Hayek’s article was not as easy to comprehend. From what I gathered, the use of resources or knowledge is important in maintaining the economy with product scarcity. When quantities decrease, we quietly shift our preferences to other products. As quantities decrease, prices increase so we determine whether the product is still valuable enough to spend those prices or find something else as productions ramp back up. I also discussed the same topic you did.

To assume all the knowledge to be given to a single mind in the same manner in which we assume it to be given to us as the explaining economists is to assume the problem away and to disregard everything that is important and significant in the real world (Hayek, 1945, p. 530).

One person cannot determine what is best for the economy. We all have different insights and knowledge that are valuable in benefitting the economy because we all see things that others may miss. We all collaborate to determine prices because what one person may spend on something, can be different to what someone else might pay, so you have to create a middle ground to satisfy the majority of people to maximize profits. Hayek made his main themes unclear to understand, but I feel like you summarized it well enough to make sense of his perspective on the topic of scarcity and prices.