Economic Parables Part 2 – The Most Basic Trade

Our nation is expanded to 2…

The most basic trade

John raises chickens. He has chickens, but he wishes to eat steak.

Bill raises cows. He has cows, but wishes to eat chicken. 

John trades 1 chicken to Bill for 1 cow. 

This is the most basic economic transaction. Both had a surplus of goods they were willing to trade in order to obtain something they desired more. In this market the value of 1 chicken is equal to the value of 1 cow.

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2 Responses to Economic Parables Part 2 – The Most Basic Trade

  1. Chris says:

    A good question at this point would be: how long will this rate of exchange (1 cow for 1 chicken) last and why?

  2. bchallies says:

    Following…..Mom

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