lectur6-page19 - Self Interest u Owners of resources:...

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19 19 Self Interest u Owners of resources : strive to obtain the highest possible price when that resource is sold or leased. u Users of resources : strive to obtain the lowest possible price for a resource so that THEY can make the most profit. Picture an agricultural producer negotiating with a land owner to rent the land owner’s land for production. What is each party trying to do and why? Does self interest drive the negotiations? At some point, land owner and tenant will come to an agreement on the rental rate. Both will probably walk away thinking the other got the better deal, but that’s just human nature. The tenant will gripe that the rent is too high, and the landowner will probably gripe that the dang farmer wanted something for nothing. And so it goes, but a transaction occurred and a price was determined that both agreed on, thus reconciling the competition created by self interest. There is a dark side of self interest as well, and unchecked self interest can be destructive.
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This note was uploaded on 12/29/2011 for the course ECO 210 taught by Professor Malls during the Fall '10 term at SUNY Stony Brook.

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