(Drivebycuriosity) - Milton Friedman belongs to the most influential economists of the last 100 years. He was the leading monetarist; preaching the classic quantity theory of money and the insight that "inflation is always and everywhere a monetary phenomenon". But he was much more. Friedman had an enormous influence as a classical liberal and fought for a philosophy of freedom and was an advocate of individual rights, free markets and trade and limited government. Friedman´s economic views are based on his insight that the unregulated movement of prices create the best economic outcome for everyone. A long time ago, when I began to study economics, I read Friedman`s "Price Theory", based on his lectures at the University of Chicago. This book influenced my thinking till today. Recently I had the pleasure rereading it (amazon ).
Friedman describes how prices respond when producers (the supply) of goods & services want to produce more or less and when consumers, corporations and others (the demand) intend to buy more or less. He also shows how supply & demand respond to price changes, spiced with real-world examples, including the impact of government policies and union actions.
Friedman`s Price Theory introduced me to the tools of economics. I learned for instance the concept of elasticity that describes how much price changes influence supply & demand. If for instance the demand curve is inelastic every change in quantity supplied will bring about relatively greater changes in price per unit of product. In addition, every increase in quantity supplied means a reduction in total revenue.
I learned how to use indifference and transformation curves, the difference between monopolies and competition and much more.
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