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When we buy things such as apples or cars or a ticket to a movie, we implicitly understand that the amount we’re paying for those things reflects, in some sense, their value. We also understand that the amount we’re paying can go up or down over time depending on a number of factors such as the supply, the demand, the quality and the like. Businesses also operate under these principles, such as when they order parts, stock up on inventory or set prices for their own products. Indeed, economists have long studied and codified the behavior of valuation and price for all kinds of items and can predict where things will move over time.

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