These economists believed that price was partly determined by a commodity’s utility—that is, the degree to which it satisfies a consumer’s needs and desires. This definition of utility, however, led to a paradox when applied to prevailing price
marginal utility (economics) -- Britannica Online Encyclopedia - 0 views
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relations.
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Thus, the marginal utility to a buyer of a product decreases as he purchases more and more of that product, until the point is reached at which he has no need at all of additional units. The marginal utility is then zero.
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utility and value (economics) -- Britannica Online Encyclopedia - 0 views
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Value theory, therefore, studies the structure of these decisions, analyzes the influence of prices, and examines the efficiency of the resulting allocation of resources. Value theory is also applied by business firms and government agencies in their decisions that relate to pricing and the allocation of resources.
Capitalism: The Concise Encyclopedia of Economics | Library of Economics and Liberty - 0 views
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Clearly, these assumptions were at odds with both common sense and the reality of market conditions. Under real competition, which is what capitalism delivered, companies are rivals for sales and profits. This rivalry leads them to innovate in product design and performance, to introduce cost-cutting technology, and to use packaging to make products more attractive or convenient for customers. Unbridled rivalry encourages companies to offer assurances of security to imperfectly informed consumers, by means such as money-back guarantees or product warranties and by building customer loyalty through investing in their brand names and reputations (see advertising, brand names, and consumer protection).
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. Neither rivalry nor product differentiation occurs under perfect competition, but they happen constantly under real flesh-and-blood capitalism.
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Small-scale producers denounced these innovators as “robber barons,” accused them of monopolistic practices, and appealed to Congress for relief from relentless competition. Beginning with the Sherman Act (1890), Congress enacted antitrust laws that were often used to suppress cost cutting and price slashing, based on acceptance of the idea that an economy of numerous small-scale firms was superior to one dominated by a few large, highly efficient companies operating in national markets (see antitrust).
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capitalism Facts, information, pictures | Encyclopedia.com articles about capitalism - 0 views
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Yet capitalism cannot function if violence is too great or if it is continuous.
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There must be substantial pauses between wars and revolutions. Government must be able to prevent mob violence. The typical entrepreneur of early capitalism, unlike the feudal lord, was unwarlike by temperament and motivated by the search for profit. Bourgeois civilization, compared with the forms of social organization that preceded it or with the totalitarian forms that now compete with it, has remained inherently peaceable, rationalistic, and materialistic.
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The enforcement of commercial contracts by the state and the extension and protection of property rights—all essential to the development of capitalism—required a strong government. The process of saving, investment, risk-taking, and profit-making flourished best, however, when the powers of the state were restricted so that their exercise would not be arbitrary
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