18
Lecture No.7
Value – Definition – Characteristics; Price – Meaning, Wealth – Meaning Attributes
of wealth, Types of wealth, Distinction between wealth and welfare.
Value and wealth
Value
The word “Value” in economics conveys value-in-exchange. It does not include free
goods which have only value-in-use. In other words, value of a commodity refers to those
goods that can be obtained in exchange for itself or purchasing power of a commodity in
terms of other commodities and services. Value can be referred to as the capacity of a
good to command other things in exchange.
Characteristics of Value.
1. It must possess utility
2. It must be scarce and
3. It must be transferable and marketable.
Price
In Pre historic times, people did not know money and they had a barter system in which
goods are exchanged with goods. Therefore, in those days value and price were used
synonymously. But now days, goods are exchanged for money. Therefore, Value
expressed in monetary terms is Price
Wealth
In ordinary language, “Wealth” conveys an idea of prosperity and abundance. A man of
wealth understood as a rich person. But in Economics Wealth is synonymous with
economic goods. In short, Wealth means anything which has value.
Definition: It consists of all potentially exchangeable means of satisfying human wants
(J.M.Keynes)
Characteristics of wealth :
1. It should possess utility
2. It must be scarce
3. It must be transferable
4. It must be external to person
Relation between Money and Wealth : Money is a form of wealth .All money is wealth
but all wealth is not money
