Wednesday, June 4, 2008

Paid for with other people's money

What do college tuition, academic journals, and health care have in common besides price inflation?

It is easy to see why this would make demand less elastic, which would imply a higher price in any but a perfectly competitive industry, e.g., (P-MC)/P=1/|elasticity|. But what is the mechanism behind the price inflation (change in price)?

1 comment:

  1. It is really not possible for people like me to tell exactly the mechanism behind the price inflation, I believe it is all about just working with been competitive. I do Forex trading and there is heavy inflation that happens. I am always very careful with these stuff, it is thanks to my broker OctaFX that I am able to work well with their rebate program, I get 15 dollars profits per lot size trade with them, it is just rocking.