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[4] VonMises: In response to Hans' statement [3] that capitalism will
soon cause a shortage of water, I would like to
interject and say that capitalism will not cause a
shortage. Consumption may increase, and supply may
diminish, but the market failure of a shortage would
occur if supply and demand failed to reach equilibrium.
This would occur if price were unresponsive. A
possible cause to an unresponsive price would be
government regulation. In this case, a shortage may
result because of government regulation and not because
of capitalism. A perceived shortage may actually be
that people cannot afford to consume the amount of water
that they did when the price was less. In this case,
there would be no shortage but a shift in supply and
demand. Please, qualify the statement [3]. |
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