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Pastimes : Austrian Economics, a lens on everyday reality
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To: Wildstar who wrote (241)9/10/2003 7:33:40 AM
From: Don Lloyd  Read Replies (2) of 445
 
Wildstar,

New Topic --

Economic exchanges

If I buy an ice cream sundae for $5, we know that my subjective marginal utility for the sundae not only exceeds the subjective value that I place on the $5, but that it exceeds it by a greater margin than anything else that I could buy with it. We also know that the seller of the sundae is likely to believe that, from an overall business point of view, the $5 price is the price that generally will benefit him the most.

If we call the above an 'economic exchange', in what ways, if any, do the following exchanges exhibit substantive differences from the above? Would it be misleading to call them 'economic exchanges' as well?

1. I give you a $10 Federal Reserve Note and you give me back 2 $5 FRNs.

2. I give you a $100 FRN and you give me back 5 $20 FRNs.
(bonus question -- how does this differ from 1. above?)

3. I give you a one euro note and you give me a one dollar FRN and a dime.

4. I give you $380 in FRNs and you give me a 1 ounce gold coin.

Regards, Don
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