THEORIES OF VALUE
Note: the first time you go through each of these topics you should click on the following items in sequence.
are some things worth more than other things?" This is one of the most
challenging questions in economics and, even after several hundred years
of effort, it is not certain that we have a fully satisfactory answer.
Our purpose in this segment of the course is to survey the evolution of
the theory of value most economists today subscribe to.
1. To understand how historical circumstances and events have influenced the development of ideas about how the world works.
2. To become acquainted with the ideas of the "classical economists" of the late 18th and early 19th centuries and, in particular, with the classical theory of value based on costs of production ("supply").
3. To see how the theory of value was subsequently modified in the late 19th century by a new analysis that shifted the emphasis from the costs of production to the subjective preferences of buyers ("demand").
4. To understand how Alfred Marshall at the turn of the last century combined the two different approaches to value theory, giving us an explanation of how value is determined by "supply and demand".