I mean the most classic example is the theoretical barter economy that doesn't exist because you need money to lower transaction costs for a high degree of the division of labor (which isn't disputed). The reason for that is that economists came up with this theoretical model and the text books want to teach barter first and then money which gives the wrong impression that barter economies actually existed. No, people either managed the economy the way we manage it internally within families and corporations or they straight up used a commodity as their money or some hard to forge symbol like precious metals. There is not much in-between because barter is inconvenient as hell and it causes social difficulties because the fairness of trades has to be evaluated very carefully, opening up the potential for conflict.
i need an answer to
>yet another example of the gap that always exists between economic theory and economic practice
what is the practice and what is the theory?
edit:
if the person is saying food prices are sticky upwards, then they need to provide evidence for that because that's a very strong claim
"We have known about the concept and relevance of hysteresis since the 1980s. In terms of the academic work, I was one of the earliest contributors to the hysteresis literature in the world. I published several articles on the topic in the 1980s that came out of my PhD research as I was searching for solutions to the dominant view in the profession that the Phillips curve constraint prevented full employment from being sustained "
Firms don't charge a 'market price'. They put a mark up on costs and sell as much as they can at that price.
In other words marginal productivity theory is nonsense.
When you do that, and you get a supply crunch as we have now, then prices will go up as we are seeing.
It's fairly obvious. I will try to sell my stuff for the highest price I can get for it. Your only choice as a buyer is to go somewhere else, or refuse to buy.
Prices are controlled by excess capacity to supply. When that capacity vanishes, particularly amongst needed goods and services, you get price gouging.
It's similar to overstretching a spring. We have damaged the supply side and it won't go back to its prior path.
Few do this. Television tells them they want things, and they'll get angry if they can't have them. So they put it on their credit-cards and kick the can down the road.