Re: Is there a generally accepted theory of value?

From: Zerge (zerge_at_hotmail.com)
Date: 03/08/05

  • Next message: Mason A. Clark: "Re: Soc Sec: How do private investment accounts solve the problem?" 
    Date: 7 Mar 2005 20:30:24 -0800

    smithaa02 wrote:
    > Zerge wrote:
    >
    > > 1.- Our most limited resource is time.
    > > 2.- Let us assume Bob and Jo have each only 10 hours per day to
    produce
    > > either food or housing.
    > > 3.- When you produce food, you stop producing housing and
    viceversa.
    > > This means that there is an "opportunity cost" to producing one
    > > commodity. (This is what seems to escape you).
    >
    > Then you you did not understand the scenerio. The opportunity costs
    are
    > outlined in the scenerio. The issue is what ratio can trade take
    place
    > that exceeds the minimum opportunity cost for both players, and that
    > maximizes the individual's share wealth gained by the division of
    labor.
    > Read it again, and you will understand.
    >
    > > 4.- You say that through trade they can produce 15 housing and 15
    food.
    > > If Bob specializes in food and Jo in housing, it means that Bob is
    > > spending 0.67 hours in food (10 hours of work divided by 15 units
    of
    > > food). I'm assuming that for each additional unit of food that Bob
    > > manufactures, he stops manufacturing 0.5 units of housing. In this
    way,
    > > Bob's production possibilities look like this:
    > >
    > > Bob
    > > Food Housing
    > >
    > > 0 7.5
    > > 1 7
    > > 2 6.5
    > > 3 6
    > > 4 5.5
    > > 5 5
    > > 6 4.5
    > > 7 4
    > > 8 3.5
    > > 9 3
    > > 10 2.5
    > > 11 2
    > > 12 1.5
    > > 13 1
    > > 14 0.5
    > > 15 0
    >
    > ? Read the problem again. If Bob produces no food he can produce 15
    > housing, not 7.5.

    OK switch the name "Bob" for "Jo", whatever.

    >
    > > 5.- So in summary, Bob the food maker can make a unit of food in
    0.67
    > > hours and a unit of housing in 1.33 hours (10/7.5). Jo the house
    maker
    > > can make a unit of housing in 0.67 hours, and a unit of food in
    1.33
    > > hours. In other words, Bob's OPPORTUNITY COST is 1.33 hours per
    food
    > > units, and Jo's OPPORTUNITY COST is 1.33 hours per housing unit.
    That
    > > means they have to sacrifice that amount of TIME (only truly
    limited
    > > resource). So obviously it is much better if they specialize and
    then
    > > trade.
    >
    > Obviously it is better to specialize. That was the whole point of my

    > scenerio... You need to read it again.
    >
    > > 8.- Price
    > >
    > > The Nash equilibrium solution is a price if 1 Food unit in exchange
    for
    > > 1 housing unit. Any other combination is Nash unstable.
    > > For example a price of 2 would give Bob 0 hours gained, whereas Jo
    > > would gain 2. Bob might accept, but it wouldn't be an economical
    > > choice.
    > > Actually the price can reasonably vary between 1 and 2. Anything
    below
    > > 1 and Jo loses, anything above 2 and Bob loses. So the price will
    most
    > > likely be 1, but it may vary along that bracket according to Bob's
    and
    > > Jo's food and housing needs.
    >
    > I didn't follow your mathmatical mumbo jumbo, but I will say this:
    Your
    > choice of 1 is arbritrarily chosen. They are going from individual
    > production of 10a 10b apeice, to 15 a 15b apeice. This means both
    > parties will not accept less then 10 (else why trade), and can not
    take
    > more then 20 (else why would the opposite party trade). One party
    could
    > get 10a and 10.1b, while the other party could 20a and 19.9b.
    >

    Of course you didn't follow it. :)
    Had you, you would have answered "oh, ok, I think you are right then".

    > > No supply and demand, "only" opportunity cost and Nash equilibrium.
    > >
    > > QED.
    > > Any questions?
    >
    > Your solution was meaningless. Your only points that had merit were
    > 'Actually the price can reasonably vary' and 'No supply and demand'
    > which I'm surprised you even admitted that...

    Not "meaningless", but "uncomprehensible" to you, more like it.
    Please don't take offense. But you seem to lack the proper training to
    discuss these matters. Sorry :/

  • Next message: Mason A. Clark: "Re: Soc Sec: How do private investment accounts solve the problem?"

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