caused by a new scientific study proclaiming that eating oats is especially healthful. Perhaps the price of a

substitute grain, like corn, has risen, and people have responded by buying more oats. The oat farmer does not

need to know the details. The farmer only needs to know that the price of oats has risen and that it will be
profitable to expand production as a result.

The actions of individual consumers and producers as they react to prices overlap and interlock in markets for

goods, labor, and financial capital. A change in any single market is transmitted through these multiple

interconnections to other markets. The vision of the role of flexible prices helping markets to reach

equilibrium and linking different markets together helps to explain why price controls can be so

counterproductive. Price controls are government laws that serve to regulate prices rather than allow the
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