00:01
So, of course, it's possible for government intervention to mess with the market.
00:05
One of the key lessons of principles of microeconomics is that the free market in certain ideal circumstances left to its own devices ends up at a price and a quantity that maximizes the social welfare.
00:21
And presumably in your microeconomics training, you've had some exposure to, for example, that suppose the government imposes a quantity.
00:30
Control, right? the government says that only qbarr should be produced.
00:35
Nobody is allowed to produce more than qbarr.
00:38
Why is this bad? well, it's bad because beyond qbarr, there's this buyer and this seller who would be better off if they could do business, right? this buyer is willing to pay maybe 50, and this seller is willing to sell at 40.
00:55
If we could get this thing from the seller to the buyer, the two of them would be dollars off between them, right? because the seller values it at 40, the buyer demands it at 50.
01:05
If the market can get it from one to the other, society as a whole is better off, right? so quantity controls, price controls, taxes, all these things can screw up with markets at the microeconomic level if those markets are generally well -functioning markets.
01:21
In the case of venezuela, the key market here is the oil market.
01:28
Venezuela sits on top of a lot of oil...