Economics in 5 Minutes

First, read this over at Ankle-Biting Pundits.

Now repeat after me:

1. Resources are scarce. There are always less resources than desired.
2. Price communicates information about scarcity clearly and immediately.
3. The best way to ration scarce resources is to allow prices to be set by the marketplace.
4. When government distorts price, particularly when it sets prices too low for the scarcity of a given resource, resource managers will invariably find a way to ration resources outside of price.
5. This invariably screws consumers and wastes resources.

For your homework, please think about how the above explains:

1. Gas lines in the 70s.
2. The collapse of inner-city schools.
3. The rise of odd cuts of meat during Nixon's price controls.
4. The relationship between minimum wage increases and increases in unemployment among black youth.