When we make a decision we weigh up the costs and benefits and choosethe option which offers the most benefit. Secondly, there are 'markets thatwith varying degrees of efficiency allow the actions of different participantsto function together efficiently.' Thirdly, prices and other market functionscan affect demand and supply, controlling desires and affecting the actions ofconsumers. Becker explains that price is not described in money terms but as ashadow price. For example, muslims cannot drink alcohol. This approach involves four theorems. Firstly, a rise in price reducesthe quantity demanded
The example he gives is if people have to put more timeand effort into having children then less people will do so. Secondly, a risein price increases the quantity supplied, the example given is women in thelabour market. Thirdly, competitive markets are more efficient thenmonopolistic markets and lead to the diversity of a product. Fourthly, a tax onthe output of a market reduces that output eg the punishment of criminals is atax on crime. Finke and Iannaccone have applied this theory to religious behaviour andunderstand that the high degree of religion in America is attributed to theexistence of a free market and therefore competition and diversification inreligion. Finke argues that in a free market start up costs are low and thisleads to new ideas and more diversity and therefore more chance of everyonefinding a religion they like.
Also in a competitive free market earning aliving acts as an