Competing with others. Value and price

BACKGROUND

Fundamental to the study of economics and to philosophical discussion about distribution of wealth are the concepts of value and price.

DIALOGUE

(Charlotte 4, Owen 8)

Owen: I want a mountain bike. I think I'll sell my racer.

That old crate's not worth a brass razoo.

Charlotte: What's a brass razoo?

It's an Indian coin, famous for being the most worthless coin ever issued.

Owen: How much are they worth?

Hardly anything. A whole truckload of them would probably be worth less than a dollar.

Charlotte: Can we get some?

Unfortunately, they're very scarce. I understand one of the problems with it is that it's very similar to the gold razoo, which is one of the most valuable coins in the world. If you're out shopping and you confuse brass and gold razoos, this is a serious mistake, so they're not used much.

Charlotte: I'd like to have a gold razoo.

Everyone would.

Owen: If I sent $5 to India, would they send me a brass razoo?

Don't be silly. As I said, brass razoos are extremely worthless. Nobody would pay $5 for one. $5 would be the price of several truckloads.

COMMENT

This introduces the concept of price as the moderator of supply and demand, and demonstrates some of the difficulties encountered in valuing goods from the points of view of different people - a process necessary to the discussion of equity and justice (see chapter 3).

Adam Smith (1723-1790), Professor of Moral Philosophy at the University of Glasgow, wrote [See Smith's The Wealth of Nations at chapter V]: "The real price of every thing, what every thing really costs to the man who wants to acquire it, is the toil and trouble of acquiring it."

As well as being important in the field of moral philosophy, these matters lead into the study of economics. For further material on this, see any introductory book on economics.

Bibliography

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