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1. Production & the
Market Process
Robert P. Murphy
Mises Academy
August 3, 2011
Lecture 3: 2nd
Half of Chapter 6 of
Man, Economy, and State

2. 2nd
Half of
Chapter 6 of MESI. Individual Time-Preference
Scale
1. Individual TP Schedule
2. Supply and Demand Curves
in “Time Market”
3. The Law of Time Preference
V. Importance of Gross Saving
VI. Critique of “Loanable Funds
Market” Approach

3. I. Individual Time-Preference
Scale

4. II. Individual Time Preference
Schedule

5. III. Supply and Demand
Curves in “Time Market”

6. IV. The Law of Time
Preference

7. A. Typical Statements
Other things equal, present goods are
preferred to future goods.
OR
Other things equal, an individual prefers a
given satisfaction in the present to the same
satisfaction in the future.

8. B. Mises’ Arguments
Without time preference (and its
consequence, positive interest rates), people
would not pay finite prices for land, which can
yield its services indefinitely.
Picture an immortal being who didn’t prefer to
achieve an end sooner rather than later. He
wouldn’t bother acting today, but then he
wouldn’t act tomorrow either when faced with
same choice.

9. C. Alleged Counterexamples

10. V. Importance of Gross Saving

11. VI. Critique of “Loanable Funds Market”
Approach