No Free Lunch: Economics for a Fallen World: Third Edition, Revised

Chapter Five: Supply & Demand: Markets at Work 105 • property rights—everyone acknowledged Ephron’s right to the property—that were formally and legally recognized (through a deed); • two individuals engaged in a trade: no one else could prevent the transaction— although conceivably there could have been other bidders; • social agreement to the contract: Abraham conducted the transaction in the presence of the sons of Heth; • market exchange as a process: reaching an agreement took time, with uncertainty at the outset, and knowledge (individual valuations) was discovered. As we explore markets at work in this chapter, we will see application of how these institutional rules lead to plan coordination (i.e., how market signals lead to changing consumer and producer behavior in socially beneficial ways).