A price tag on an item is a pretty straightforward way of letting you know how much that item costs.

But prices are more complex than a few numbers crunched together. They convey a lot of information on how resources are allocated. This is what economists call the price system.

In this talk, Tyler Cowen provides examples of the price system in action.

How is it that we have access to fresh roses in chilly places each Valentine’s Day? Why is it that BMW is, in fact, America’s leading auto exporter? And why does the supply chain for a single iPhone include more than a dozen countries?

The answer to these and other perplexing questions lies in the price system.

Stay tuned for more videos in this series, Tyler’s 9 Big Ideas of Economics, released weekly!

Cowen delivered this talk at the 2018 AP Economics Conference co-hosted by MRU & the St. Louis Fed. If you’re a high school teacher that wants to attend this conference next year, register here: https://bit.ly/2DozLzv

Or join MRU at a future economics teaching event! Visit this page for more information: https://bit.ly/2AQIWq5