What determines market prices? Buyers and sellers must know of feasible trades. They can learn from their mistakes. They prefer higher profits to lower profits. They think in discreet terms. Both participants win in market exchanges.
Prices allocate resources to their highest uses. It is welfare-maximizing in any meaningful way. Prices are signals. Prices provide feedback to entrepreneurs about the quality of their forecasts.
The third in a series of ten lectures designed to introduce the layman to the basics of applied Austrian economics: "Fundamentals of Economic Analysis: A Causal-Realist Approach".
Recorded at the Mises Institute in Auburn, Alabama, on June 12, 2007.