Cycle 1 - Research Round 2: Economic Value

For my second research round, I’ll like to take a look at value, particularly economic value. There’s an element of psychology when it comes to value (which I will explore later) though for now I want to look at the economic side of things.

Value, in a very simplistic sense, is the price or time a consumer is willing to pay for a particular item. The value of an item is generally determined by supply & demand and utility.

Utility is the perceived usefulness or satisfaction gained from an object. An example of this is chocolate. For the average person, the consumption of chocolate results in higher utility. Consuming another chocolate would provide lots of utility, though it would be slightly lower than the first chocolate. Over time, the more chocolates consumed equals lower utility over time. Utility changes based on the needs and experiences of the customer, resulting in a change in economic value.

Supply and demand is based on utility, though it includes many more factors. Supply and demand is a collection of data that tells how much of something a consumer is willing to buy at each price. For example, a consumer will buy 4 pencils at $.25, 2 at $.50, 1 at $1, etc. Market value is generally determined by the market equilibrium; a compensation between how much a consumer is willing to pay (demand) and the amount a producer is willing to supply. (Mathematically, the market equilibrium is based on the supply curve and demand curve, specifically where they intersect when the data is graphed). If supply went up, the demand would go down. If supply went down, the demand would go up, and therefore the price of the product would go up. (These scenarios are very simplified, though they still show the relationship between curves in supply, demand, and price.)

Alternatively, there’s another way of determining price according to Karl Marx. He argues that price is fixed, and that the amount/type of labour used in the production of the product should be the determining factor. This is in contrast to finding value based on the finished product only (without consideration of the labour required).

Relating this back to my project on irrational value, utility is an important concept for how intangible property is viewed. Labour as well as Supply and Demand probably aren’t the most important factors of pricing, so the overall satisfaction and usefulness should be important to consider. Though, when it comes to something like bitcoin or stocks, how is utility recognized? That’s something I’m considering to look into further for my next research round, as this round was mostly focused on tangible objects and the overall idea of value.

Original Post

Hello Opal!

Nice post, you have a very eloquent and articulate style of writing which I appreciate. However, I would like to remind you to state you sources at the end of each post, just so we, as readers, know where you found your information. For your upcoming research, it may be interesting to draw relations from the Wall Street Crash of 1929 when talking about economic value and comparing the changes before and after this event.

Here are some potential sources:

Good luck!

 Hu Opal, 

 Nice analyzing, but I also wanted to remind you to include sources. I think you've shown a clear understanding of your topic, and it would be really interesting (as Mr. Szutu mentioned above) to see how supply and demand applies to certain cases. You could look at a specific world event, or just see how this affects people's daily lives. 

 Neat research! 


its very interesting reading your post because you have explained all the terminologies used in economics, but you left out your source of information. And talking of economy, what brings about the difference in value of currency in different countries? an example can be a Canadian dollar has a higher value than a Kenyan shilling.

Hello Opal

Your analysis of relating supply and demand to utility. This makes me wonder about the intended use of cryptocurrency, specifically Bitcoin. While meant to be a currency, it has turned into more of a commodity. With Bitcoin being such a versatile and ever-changing "commodity", how would its utility change when it is almost never consistent? Should it be treated like a currency at all now? I for one would be unhappy if my chocolate tasted differently each time.

Great post, looking forward to the future.

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