The world in which we exist is composed of scarce resources that can be used to satisfy our virtually limitless needs, wants, and desires; more specifically the world is composed of scare resources with alternative uses.

Human preferences and circumstances vary greatly. Individuals assign a particular value to an available resource through a process of individual thought. The concept of value apart from an individual living being is not possible. Because the concept of value applies only in relation to individual preference toward specific available resources at a specific point in time, value is subjective in this regard.

For example, a person in the desert may value a cold beverage differently than a person at home on the coach who just finished drinking a large glass of lemonade. A person's subjective valuation arises from one's desire to alleviate a particular problem in relation to the other problems to which he could devote his effort. In a world where resources (including time) are scarce, we have to choose.

Goods are items existing in scarce quantity that have subjective value to an individual. An apple or a dump truck might be a good. An element in a far off universe that has yet to be discovered is not a good. Goods have no inherent value by themselves. In order for something it be a good it must be useful to someone.

Click here for a pdf of all twelve parts of the Fundamental Economic Concepts from

Additional Suggested Readings:

Peter S. Heinecke - The Fallacy of Comparable Worth
  • "Comparable worth [intrinsic value], under the guise of justice, offers us tyranny and economic disaster. We must reject it."

Frédéric Bastiat - Economic Harmonies
  • "Having once established that value is not inherent in matter and cannot be classified among its attributes, I am far from denying that value passes from the service into the product, or commodity, in such a way as to become incorporated, so to speak, in it. I beg those who disagree with me to realize that I am not such a pedant that I would exclude from our language such familiar expressions as: "Gold has value," "Wheat has value," and "Land has value." I believe only that I am within my rights in asking for a scientific explanation; and if the answer is "Because gold, wheat, land, have an intrinsic value," then I believe I have the right to say: "You are wrong, and your error is dangerous. You are wrong, because there is gold, and there is land, that is valueless—the gold and the land that has not yet been the occasion of any human service. Your error is dangerous because it leads to classifying as a usurpation of God's gratuitous gifts to men what is actually man's simple right to exchange his services with other men."

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