 Okay, so what we're going to do in this talk is we're going to lay the groundwork, the foundation for the demonstration that will come later over the next two days, that show that a market economy is the only human social arrangement for us as human persons. It's the only genuinely human economy. And the way in which we'll proceed in showing this is to, well, we can't show that whole thing in one lecture, right? But the groundwork that we'll lay is the first, we'll talk just about some fundamentals of human action. What it means to be a human person engaged in human action. Then we'll talk about what Carl Minger called the personal economy. The way in which each one of us arranges the means that we have command over toward the attainment of our desired ends. And then we'll talk about the social economy. We're speaking about then the division of labor. How do we take our personal economies and integrate them into a social economy? And then we'll talk, finally, then we'll talk about market prices. And once again, I'm just laying some framework here, laying some groundwork, exposing you to a framework that you'll see fully developed over the next two days. Okay, so let's begin just with the definition of human action. Of course, we know it's purposeful behavior. We have an end that we're striving to attain when we engage in human action. We have a motive, we can give reasons for engaging in action. But we know right away that just having an end that we wish to attain does not constitute action. We're not infinite beings that just through an act of will, we can attain our ends. We're finite beings. And as finite beings, we make a distinction between ends and means. We realize that action requires us to perceive that there are means available in the world that we can have command over and apply to the attainment of our ends. We also see right away, of course, because we're finite, that our actions do not fully attain our ends. And they neither do this completely in any particular action, nor do they do it permanently. In addition to this, we find another fact about human life, which is the different means that we have available to us as human persons here in this world are somewhat convertible across different actions. It isn't as if only one particular thing, a means, does one particular end, right? We're not in a world like that. There's some substitutability, however you want to say this. Now, because of this, we get to the principle that means are scarce. These two facts combined give us the principle of scarcity. And from scarcity, what we can logically infer, of course, is that when we're engaged in action, it requires us to choose. We have to choose to take means that we possess and apply them to certain ends, leaving other ends unfulfilled. And for any end that we pursue, we have to choose which means to apply to that end and set aside other means that were technically suitable to the attainment of that end to something else. So we're always involved in this process of choosing. And as human beings, this is, in fact, where the word economics comes from. We economize in these choices. That is, given our assessment and our circumstances and so on, we choose to pursue higher-valued ends with our means, setting aside lesser-valued. And we choose to adopt a set or combination of means that is lower-valued, that can attain the same end as a set of means that's higher-valued. This is what it means to be a human person. This is the organizing principle of human action that it's economizing. Now let's get to this idea of valuing since I've introduced this notion. Value is just a personal judgment. So each person makes a judgment in his or her mind of the value of pursuing this particular end or the opportunity-cost value of particular means that might be used to attain this end. And this personal judgment, then, of course, is subjective. That is to say, the value that we hold in our minds from acting in one way and relative to another, using means in this way and not that way, is a state of mind. It has no, as David Gordon would say, it has no extensive property. It exists only in our minds. It's truly subjective, then, in the Aristotelian sense. And because of this, of course, it's not subject to measurement. It's not a substance, in other words, that we can measure. We can't define a unit of it. We can't say in any sensible way that you're getting five units of subjective value from listening to me talk or I'm getting 15 units of subjective value from talking. These are just nonsense statements, right? Because we don't know what a unit is. There's no common unit of measure. And so sometimes it's put, we can't use cardinal numbers when we talk about subjective value. All we have are ordinal ranks. We only establish a preference between the value of one thing and the value of another because of subjectivity. The other thing to mention here is that, and this is a separate feature of personal judgments, the subjectivity principle here, that valuations that we make are not constant. They're subject to change. Again, we just know this as human persons. We just think about our lives and we realize this that our valuations are subject to change. If they're not subject to change, then every aspect of human activity is a variable. That is to say, there are no constants that exist that might allow us to construct functions between quantitative data sets. So there's no such thing as a demand function, literally speaking, because there are no constants. They're just variables in price movements and then quantity demand changes. We're capable of altering the way in which we value things and therefore we can't presume that they're constants. And therefore there's no functional analysis or about human action. Now we can say the same thing, these subjective principles apply then also, of course, not just to the value of the thing we choose, but to the value of the thing we forego. So the cost of an action is also subjective fundamentally. And we mentioned before, since we're always economizing, we're trying to minimize our cost in action as we see it subjectively. We're trying to keep the value of the means that we use and alternative uses lower than otherwise. It also follows again from these basic principles that in every action, a person aims to attain a net benefit. There's always a value difference between what the person aims to attain and what the person foregoes. There's a, we could call this profit, right, a subjective profit or a net benefit. I mentioned this only just to alert you to the point that I made initially. Profit is fundamentally human. It's a fundamental human principle of all acting. Monetary profit is just a manifestation of this. And so this is a very important correct and I think a sound and correct way of thinking about profit. Now let's move to one step more difficult here. Let's move to the question of if value just exists in our minds and it centers around the end that we're striving to attain. How does value get embedded if you wish to put it that way? How does value get assessed or embedded in means? And here, of course, there are different logical possibilities. And the Austrian view of this, the Massessian view of this is the top line. And this is called the theory of imputed value. And it says that the value of means are assessed as valuable by the person acting in accordance to the aid that they give in attaining the end that the person's striving to attain. And so the arrows of causality move from left to right, from the mind to the consumer good, to the producer goods that can be assembled to make the consumer good. So pretty soon we'll all get hungry for lunch and we have the desire of satisfying our hunger and having the enjoyment of the taste of the food and so on. And because of that, we value some particular sandwich or some particular consumable good. And because we value the sandwich, we value the component parts of it, the ham, the cheese, the mayo, the horseradish, whatever you put on the sandwich. This is the fundamental way of looking at the relationship between the value of ends and the value of means. And so it structures all the way to all producer goods. Again, hopefully as we go along in these basic points, you're already translating this into the market economy. You're already seeing the correspondence between this discussion and what happens in the market economy. Okay, I've also just for a comparison, I put the other two logical alternatives up on the board or the slide. One is the middle line is the British classical theory, right? The cost of production theory that says value is inherent in producer goods. And then through the act of production, this value gets transmitted to consumer goods and then our minds are sent to this value. So this would be, again, the view of Adam Smith, the view of Karl Marx, the British classical school. And then the last row is the neoclassical school, which says, or at least the sort of Marchelian version of the neoclassical view, which says that the value, at least the market price of a consumer good, is jointly determined by subjective value in our minds and objective production costs. And hopefully, again, you can see right away that, logically speaking, if you accept this conception, then you must give up a cause and effect explanation of human life. You have to jettison that and adopt a mutual determination theory, where everything depends upon everything else and there isn't really any cause and effect structure that exists to be explained. Okay, so now let's turn to the personal economy. And I introduced this already, the personal economy. This is a phrase that comes from Karl Manger. And I think a very helpful phrase, actually, that isn't widely used, maybe as much as it should be. The personal economy is the general conception of how each one of us, how we would analyze each one of us engaged in the actions that we're actually engaged in. We're all engaged in a personal economy, where we're subjectively valuing the different possibilities of our action. We have means available to us, and so on and so forth. Now, remember, again, we're just trying to introduce certain basic principles at this point. So there are a lot of nuances that we're glossing over that hopefully you can ask in the Q&A and that'll be addressed in other lectures. So just make mental notes of those as you go. Now, for our purposes, we want to take the most logically simple case of a personal economy. And this is the imaginary construct that economists call Robinson Caruso. So Robinson Caruso not only has a personal economy, just like you and I would, right? But he's completely isolated from other people. So he's not trying to integrate his personal economy with other people's personal economy into a social economy. So all of his production and consumption is self-sufficient. That's the idea. And again, this is just a helpful analytical device for us to see what exactly constitutes fundamentally human action and the human economy. What does it mean in a fundamental sense? And then we can build on that. So let's suppose that Caruso has available to him just two consumer goods. He has coconuts and berries. And then he has three producer goods. He's got coconut trees, where the coconuts are that he can produce the coconuts from the coconut trees. And he has berry bushes where he can pick the berries. And then he's got his Liber. And so in that simple setting, we can ascertain the most fundamental principles of human action. And these fundamental principles are as follows. And here's my illustration. The two laws of utility. So suppose Caruso does the following in his action. He makes choices. And suppose his choices look like this on the left-hand side for coconuts. He decides two coconuts. He's got these coconuts and berries sitting in front of him. He decides that two coconuts is the amount of coconuts that he wishes to attain his end of drinking the coconut milk. He doesn't want three. He doesn't want one. In other words, the fundamental principle here is that in every action, given that we have means available to us, we choose the amount of the means to use as suitable to the attainment of the end. This is a choice variable for us. So let's say he chooses two coconuts. Now if he chooses two coconuts, then obviously in this example, the two coconuts satisfy his drinking end. So if he has two more coconuts, if he has a second unit of two coconuts, it would have to be applied by Caruso to a less valuable end. What would this be? Well, I know we'd have to see him act, you know, to know. But since it's just an imaginary construct, we can just make it up, right? We can just suggest plausible actions. So let's say his second action is he breaks the coconuts out and he eats the fibers, right? And then the third thing he does is potentially, let's say, he just takes two coconuts and stores them for consumption in the future or something like this. But the point is he rank orders these, right? He orders these in priority of value. He orders the units in accordance with the value of the ends to which they're going to be put. And this gives us, of course, the first law of utility. That if a person has a larger stock of a good, and this good is in equally serviceable units, as we say, right? It's interchangeably useful units. Then the larger the stock of a good a person has, the lower the value of the least valuable unit or the marginal unit. And then the second law of utility says that if a person has a larger stock of a good, he prefers that to a smaller stock, right? So hopefully this, you can see right away that these are fundamental principles of all action. And so I put this up for berries, too. It would be the same thing, right? The same principles would apply for his berry consumption. He'd have different uses for it. He eats the berries. That takes two quarts. And then that end is satisfied. So the next two-court unit would be applied. Yeah, okay. So here we go. And then the other point that I want to stress here on this personal economy is the allocation of consumption. And remember, again, what we're arguing here is that these principles would help us explain your action today and my action today and so on and so forth. These are fundamental principles underlying all action. And here the principle relies upon what we said before, which is that if a person has a choice between two alternatives, he'll value one more highly than the other if he acts towards them and then choose the more highly valued one. But once he attains the end that he's pursuing that's most valuable to him, any additional means that he used for that end would have to be less valuable to him, right? And so it opens up the possibility that once Caruso consumes the coconuts for drinking, the two coconuts, that the value of additional action with coconuts would fall below the value of the first use of his berries and so on. So a person in action is always giving up something less valuable or something more valuable. This means that we're all arranging our consumption in such a way that there are no significant value differences between shifting our consumptive activity from one thing to another. And by the way, let me pause here and just say, when we talk about economic theory, we're not saying that we as actors think this way. We're not saying, you know, I'm thinking all the time about, you know, the equimarginal principle or something. This is just the economic theoretical apparatus by which we understand human action. We bring an analytical understanding of human action in this way. So we should expect this same sort of thing to happen in the social economy if it is a truly human economy. If it's a human economy, then we should see the allocation of consumption across people in society in such a way that more highly valued consumption is undertaken at the expense of lesser valued. And this means that the consumption value at the margin for different things would be roughly the same. Otherwise, again, things would be shifted around and improved. Okay, so we can do the same thing then with production. A very similar principle, right? All we need to do is invoke the law of returns. And the law of return says that there's a technically optimal amount of a variable input when combined with a fixed amount of complementary factors of production. And for Caruso, this is his coconut trees and his berry bushes. So the coconut trees are given to him. They're fixed. He's only got six of them or whatever on the island. And as he applies his labor sequentially to produce from that finite complementary factor of production, he'll find in this case diminishing returns, right? This is because he can go to the coconut trees and pick coconuts off the ground, which is easy to do and his productivity is very high. But once he exhausts that, now he has to climb the trees and his production goes down. Or he has coconuts on a tree that's further away from where he consumes them. So he's got transportation costs and so on. So this is what he will do, right? He'll organize his application of labor in such a way that he gets the most valuable productive possibility first and then he'll go to the next most productive possibility and so on and so forth. And hopefully, again, you're translating this already into the social economy. We want oil or some means that can be produced in different places at different difficulties. If we have a human economy, we'll exhaust the most readily available supplies first, the lowest cost supplies first. And then as those get exhausted, we would move to others that are less productive physically and would have higher costs and so on and so forth. We would just move progressively out in this way. And so we would, or in my imaginary construct, the same is true about berry picking for Caruso. Now it is true, of course, in the real world, not in my imaginary construct, but in the real world it's possible for production processes to experience increasing returns for a while and constant returns maybe for a while. But every production process suffers diminishing returns, decreasing returns right eventually. And so this is the law of returns. Now if the law of returns is correct, then we have the same situation for allocating labor that we did for allocating consumption, right, allocating the producer good. And here it's just that Caruso is going to allocate his labor to the production possibility that gives him the greatest value. Let's say, in my example, it's the production of six coconuts with his first unit of labor. But once he does everything he wants to do with the six coconuts, applying another unit of labor to coconuts is not valuable. It drops all the way down to whatever fifth on the list. And instead Caruso will move to berry picking. But eventually he would pick so many berries that he would satisfy all his highly valued ends and maybe coconut production would come back in at some point. Now let me offer one last caveat and then we'll go to the social economy. Tomorrow in the lecture on the rate of interest, we'll talk about the temporal and inter-temporal aspects of allocation. Here we're just talking about logic. We're just talking about prioritizing things. We're not saying Caruso must consume the coconut's first thing in the morning. We're leaving that question open, right? Okay. So to sum up the personal economy, this pattern of production and consumption that Caruso engages in is integrated by Caruso's intellect. He perceives the usefulness of the means and what his production possibilities are and so on and what happens if he does this and that and what have you. And the judgments that he makes about the value of attaining different ends by the application of different means. This is what it constitutes a human economy. Now let's move to the social economy. And the first point to make here is that although Caruso can arrange his personal economy and so can you and so do I. We are all doing this by subjective valuation. We'll see it's one step more complicated but that's something we'll talk about this afternoon. But Caruso can arrange his entire production and consumption just in his own mind through subjective valuation. So the question, the first question logically for the social economy is if we have a division of labor where we're all trying to integrate our activity, each of us producing to satisfy the consumptive ends of other people, is it possible for one person to organize this economy in an economizing way? And hopefully you can see right away this is not possible. That it is impossible for a center planning board to arrange the allocation of producer goods across all the different possibilities in a division of labor in such a way that the most highly valued consumptive ends of all the people involved in production are satisfied. This again is because subjective value is locked in the minds of each individual person. And it is impossible for a third party to objectively compare these subjective values. So much for central planning, right? So much for socialism. This cannot be done either by plebiscite. It can't be done by vote because we face the same problem, right? We can vote and get a solution. We can have a central planner who gives us a solution, you know, who crams some allocation of resources down our throats and says, you're going to do it this way, like we're seeing recently. But this is not economizing. It's not economizing because there isn't any way for us to know in voting whether or not we've accomplished higher valued production processes, whether we've justified them in the vote or whether we're voting for something we like personally, right? So much for democratic socialism. Notice the same problems exist then on the production side. Remember, Caruso's problem is both choosing ends or consumer goods to produce, and then, you know, applying the producer goods to production. But the same problems exist. There isn't any possibility of arranging and economizing division of labor by one person or a small group of people just subjectively valuing what they think ought to be done and then ordering people or getting them to even to agree to do these things. Nor can we do this again by vote. So, and again, this is a problem. If this, if you don't grasp this right away, this is a problem that Dr. Salerno will talk about tomorrow in greater depth. So how is this done then? How can this be done? And the answer is that it's done through market exchange, through voluntary exchange. And here's where we get then to the theory of price. Now, what I put on the slide here, I mentioned again that the main thrust of this discussion that we're having is to set out a framework that's helpful in kind of organizing your thinking about what you're going to be exposed to over the next couple of days. And so this is a logical flow chart of what the theory of price looks like. We're not going to cover all this, but at least you have the schematic, right, to organize your thinking. And so just to run through this very quickly, you could see that it begins, it begins with people's preferences. Or we could say more fundamentally, as we already mentioned, it begins with human persons who find themselves in certain circumstances. And then they, you know, have command over certain means and so on. And now they're trying to integrate their activities. And what they'll find, of course, is their preferences differ. And if their preferences differ, there's room for mutually advantageous trade between persons. And so some might demand consumer goods. They'll have a, in other words, they'll have an ordinal rank for consumer goods above a sum of money. And another person might rank order the things in reversed order, the sum of money above the consumer good. And then a mutually advantageous trade could occur, right? And then if a mutually advantageous trade can occur, then it's just a matter of coming to a mutually advantageous price. And so the price would emerge. And that's what we want to cover. We'll cover that in a little bit of detail. That first sequence we'll cover on prices of consumer goods. But I want to give you the whole thing. So the prices of consumer goods as they emerge in the market have two effects. One is they generate expenditures for the buyers of the consumer goods. And the other effect which is more important for us to trace out here is they generate revenues for the entrepreneurs who have produced these consumer goods. The revenues then have the effect or a cause of the demand that the entrepreneur expresses for factors of production to produce the consumer goods. So we as consumers constrain the entrepreneur in our buying or refusal to buy the products that entrepreneurs produce, we constrain that entrepreneurs command over resources. And then the demand that the entrepreneurs have for factors of production, which again is constrained by us as buyers of the products. And the preferences that factor owners have to supply factors of production. So we have labor each one of us and we supply this or not supply it. And they're landowners who supply or not supply their land and intermediate producers and so on generate the prices for producer goods. And the logic of the determination of price is the same. It's just supply, demand, market clearing, right? And we'll talk a little bit again about that in just a minute. And then the prices of producer goods have two effects. They generate income for the owners of the factors of production. And so this now opens up the door for talking about the allocation of income or the distribution, if you wish to call it that, of income across different persons and in the market economy. All the questions that entertain our opponents on the left about equality or inequality of income and so on and so forth, right? So now through the week you'll learn about what the actual operation of the market generates in terms of income. But here we're interested in the other side of the diagram. The price that producer goods generate costs for the entrepreneur. So you can see right away that hopefully you see right away that the first form of economic calculation of the entrepreneur by which the entrepreneur makes decisions about the uses of factors of production and goods to be produced in an economizing way is the economic calculation of net income, the revenue that's received by the entrepreneur in selling the output that we generate through our purchase of the goods, relative to the prices of the factors of production, the costs that are generated by the consumers of other goods that entrepreneurs are, that fund entrepreneurs to buy and compete with the entrepreneur we're buying from, right? For these factors of production. So we do have a genuine social phenomena here that gives us the basis for the entrepreneurs to make economizing decisions about the use of resources in the social economy. We can, just like every other task in the social economy, we leave decision making over the allocation of resources and what goods are gonna be produced and how assets are gonna be accumulated and so on and so forth to entrepreneurs who themselves are part of the division of labor, who succeed or fail based upon their acumen in doing these tasks, right, in the division of labor. Okay, so now let's go on to the demonstration. I wanna just run quickly through the demonstration of these first three steps that I had on the last slide, how preferences lead to demand and supply, how demand and supply gives us the price of the good. Now I wanna start with a simple case and this is a case as you'll see that I've got in the tagline there, preferences of a 2019 iPhone XR. So I'm dealing with a used, durable consumer good. Just like starting with Caruso, I start with that because it's simpler, right? And then at the end, I'll make the case for the newly produced goods, which is more important perhaps, right? Logically more important. Okay, so let's start here. So these are iPhones that were sold back in the fall and are owned then by just regular people who have been using them and then there's a secondary market trade for them, right? You can buy them as used goods on wherever, eBay, Craigslist, whatever. And so that's what we're depicting here. So let's suppose if the laws of utility apply, then I'm just going to, again, and kind of invent this hypothetical situation that conforms to the laws of utility. So we have this person who doesn't own an iPhone XR who's, you know, mildly interested depending on the price. They're sort of interested in obtaining one. And the preferences look like this. Although we need to have, in order to be logically consistent with preferences is, they have to manifest the two laws of utility. So the first iPhone XR has to be worth more than the second one. What does that mean? It means that this person would have a second use for the iPhone XR that's exclusive from the first use. For example, he could use the first one himself and he could give the second one to his son. Something like that, right? So that's the idea. So he might be interested in buying two if the price was right. Only at a low price, right? And at some intermediate price, he would only be interested in obtaining the first iPhone. Why? Well, it's more valuable to him. The first used is more valuable to him. The second law of utility is embedded in the monetary sums, right? We said the second law of utility is a larger stock of a good is preferred to a smaller, a larger sum of money is preferred to a smaller. You can't rank larger sums of money above smaller sums of money, excuse me, above larger sums of money. That would be illogical. And so the preference rank conforms to the two laws of utility, and that's all we need. We don't need an accurate empirical example, right? Because we're just working through the logic of this. So this gives us the law of demand as I've put in the middle column on the right. At a very high price, like $700, this person wouldn't buy, you can be out of the market, saying, no, it's too rich for me. But at some lower price, say $650, this person would be, yeah, I'll buy an iPhone XR, a used one. He'd be even happier, of course, at $550 because of the second law of utility. It'd be better for him. And if the price were low enough, let's say $500 below, he'd go for two. So this is the law of demand. And then we can construct a law of supply from the same chart, because again, this is just an example that contains the laws of utility by constructing it in such a way that suppose this person, instead of not owning an iPhone, already owned two. Suppose he bought two back in the fall, and he actually possesses the two. Well, if he possesses the two, then he might be interested in selling. And whether he sells one or two or none depends upon the price, right? And so we get the law of supply that only at higher prices will the quantity sold or offered for sale be higher. Just like the law of demand only at lower prices will the quantity bid for purchase be larger. Now you notice if these were two different people, you can see right away the mutual benefit that they could engage in in trading. They could only trade one of the phones, not two, but they could mutually benefit by trading one of the phones. The seller is willing to take a price $5.50 or above, and the buyer is willing to pay a price $6.50 or below. And so the quantity demand and quantity supply can be equal. The market can clear, in other words, as we say, at some price that's intermediate. If the seller pigheadedly, let's say, holds out for $700, even though the seller is willing to sell the phone at $5.50 if he holds out for $700, then there would be excess supply. The seller would not sell, even though he's willing to sell. According to these preference rates, he's willing to sell. So in the face of excess supply, if the seller were to make a first offer that was way too high, he'd be perfectly happy to come down. And if the buyer makes a low ball offer, which is seemingly in his interest to do, he wants to buy at the lowest price. Why doesn't he just offer a certainly low price, like $500? Well, the reason is there'd be excess demand. He wants to buy, but the seller doesn't want to sell. So you can see that this is not particularly problematic. Excess supply and excess demand. It's just it vanishes as soon as human action is consummated between the two parties. And to the extent that it's consummated, well, then this is not, logically speaking, a problem. OK, so the only other thing then we need to do to sort of make the example a little bit more robust, and then we'll see again some of the implications of this, is to add competition. So in most markets, it's not just two people, right? That would be a little strange. But there are alternatives. For the buyer, there are alternative sellers. And for the seller, there are alternative buyers. And again, in the world that we live in, different people have different preferences. And so logically, we can stratify the buyers and sellers in terms of their eagerness to buy and their eagerness to sell, which is what I've done here, right? Buyer A is the most eager buyer, willing to pay the highest price, right? And could outbid buyer B. And buyer B is more eager than buyer C. And seller X is the most eager seller, willing to sell at the lowest price, who could undercut seller Y. And seller Y is more eager than seller Z. So then the question becomes, well, if you have a whole bunch of people who are getting together and engaging in trade, then what happens? Is this different, categorically different from just two people coming to a market clearing solution? And you can see that it's not really categorically different. I mean, it has its nuances, but it's not categorically different, right? There'll still be the same principle that would apply if one of the sellers overprices the good, starts at an offer that's too high. Then that seller will see immediately that nobody buys from him or fewer than he anticipated. And if he's willing, he'll lower the price. If he's willing to sell, in other words, the lower price, or any seller who's willing to sell at the lower price will undercut him. And then the market will clear, right? And the same thing for buyers who might try to low ball at first. And then that's sort of a situation of excess demand will be quickly eradicated, either by competition or by the sensibility of the person who's made the low ball offer, simply upping the offer because they want to make the trade. So we see the same principle. And now let me end on this line just by mentioning the logic of newly produced goods. What if we move to the more difficult case? Don't cost of production or other factors come in as causal elements. If we have a producer who's, say, we have now the iPhone SE, and it's newly produced. And how does Tim Cook and his entrepreneurial group think about this? Don't they try to hold out for covering their cost of production or some other such notion? And here we can, again, just to organize this logically, we can organize the categories, right? The categories of possibilities. So a person who's demanding a good, who's interested in buying a good and paying money, establishes a rank order between the two options. It's the value of getting the good. That's what he's interested in. I want to acquire the good. And then the value of the money given up. And the value of the money given up, since he already possesses the money, the value of the money given up, there are two alternatives logically. One is he can just keep the money. He can just keep the money, and then sometime in the future he'll buy something else with it. Or he'll just hold it for other purposes. He could do that, right? Or he could take the money, and instead of paying this seller, he could pay another seller and get the good. So that's it. He either keeps the money or he trades it to a seller. Either trades it to the seller that's in front of him offering the good or he trades it to another seller. Those are the only logical options, right? And then the same logical options then exist for the supplier, the seller of the good. It doesn't matter whether it's a used good or a new good. Tim Cook is in exactly the same position as the guy on eBay who's selling a used good. He only has two logical possibilities, right? He wants to get the money. He wants to make the sale. He's got the good. Since he has the good, he can do one of two things with it. He can keep it. Or he can sell it to another buyer. And that's it. He's exactly the same options as the person holding a used good. And so there's nothing logically different in the outcome, right? There's no cost of production here. There's no other consideration but the preferences of the entrepreneur in this case. Now it is true. I realize there's some nuances involved. And again, we'll chase those down as we go through things this week. And just to give you one avenue on which this will happen, and Dr. Klein will have a whole lecture on entrepreneurship. But I'll just give you one line to think about in closing. And this is the one difference, of course, for the entrepreneur as opposed to the consumer who already owns the good and is selling it, is that the entrepreneur is in fact concerned about production? And the question is, how do the prices that can be fetched for goods now that have already been produced affect the decision the entrepreneur is going to make now moving into the future to produce? That's the question, right? That we haven't answered here. That's the issue. That's what's different between the producer and the non-producer selling the good. And again, just to give you a little guide to this, from Ludwig von Mises, Mises calls this decision appraisement. So Mises says, in the personal economy, we're engaged in valuation in making our decisions, just subjective valuation. The entrepreneur adds to valuation appraisement. He's considered that he's interested in, he or she's interested in the monetary results of the production, not just the subjective value. Tim Cook doesn't produce all those iPhones just to run his fingers through them, take showers in them or something like that, right? He wants to sell them, and he's hoping to fetch revenues that exceed his cost. But he has to incur his costs before he earns his revenues. He has to buy the inputs and produce the output and then sell the output. And so he has to use the array of existing prices today to make appraisements of prices in the future. This is the element that will be talked about again in the next few days. All right, thank you very much. Thank you. Thank you.