Google
Wednesday 
January 20, 2021 

AmosWEB means Economics with a Touch of Whimsy!

AmosWEBWEB*pediaGLOSS*aramaECON*worldCLASS*portalQUIZ*tasticPED GuideXtra CrediteTutorA*PLS
ABILITY-TO-PAY PRINCIPLE: A principle of taxation in which taxes are based on the income or resource-ownership ability of people to pay the tax. The income tax collected by our friends at the Internal Revenue Service is one of the most common taxes that seeks to abide by the ability-to-pay principle. In theory, the income tax system is set up such that people with greater incomes pay more taxes. Proportional and progressive taxes follow this ability-to-pay principle, while regressive taxes, such as sales taxes and Social Security taxes, don't.

Visit the GLOSS*arama


VALUE:

The worth members of society place on a good, service, resource, commodity, or other asset, which is based on the direct or indirect satisfaction of wants and needs generated. In an economy that uses markets to exchange commodities, value is commonly indicated by price and measured by the economy's monetary unit.
The ultimate source of value is the amount of satisfaction generated from consumption. More satisfaction means more value. However, because value is based on satisfaction, it is highly subjective. What is valuable to one person might not be valuable to another.

To Each Their Own

The satisfaction generated by a particular commodity depends on the person being satisfied. As such, value also depends on the person doing the valuation. A particular good can generate a great deal of satisfaction, and hence be quite valuable, for one person, but not so for another.
  • Donna Newberry, for example, thoroughly enjoys the taste of horseradish sauce. She applies it to anything and everything--hot dogs, bologna sandwiches, ice cream, apple pie, breakfast cereal. It provides Donna with a great deal of satisfaction. As such, Donna places a high value on horseradish sauce.

  • Rhonda Newberry, Donna's twin sister, has a dramatically different opinion of horseradish sauce. She hates it. She hates it with a passion. Not only does Rhonda not apply horseradish sauce to any food product, she does not patronize a restaurant that serves it. Horseradish sauce provides Rhonda with no satisfaction. As such, she places a low value on horseradish sauce, as in zero.
If everyone derives the same satisfaction from the consumption of horseradish sauce as Donna Newberry, then the price is quite high. However, if the public subjectively values horseradish sauce like Rhonda Newberry, the price is very low.

Indirect Value

The value of consumer goods depends directly on the satisfaction generated. Donna is willing to a pay a premium price for horseradish sauce because she likes it, it satisfies her wants and needs.

In contrast, the value of productive resources (labor, capital, land, and entrepreneurship) is indirectly based on the value of the goods produced. A resource used to produce a good highly valued by society is also valuable.

Consider the situation facing two equally intelligent, equally talented, equally industries, college graduates.

  • Robert Fredrickson decides to pursue the study computer programming. Fredrick Robertson, his college classmate, chooses to study of classic English literature. The outcome seems obvious. The value of the labor resources of each graduate is ultimately based on the value of the goods each produces.

  • Robert Fredrickson takes a job with OmniComputer. The software he helped to develop, along with a hundred and forty-three other programmers, sells for $49.95 and is used by millions of computers. Based on software sales, OmniComputer places an annual value of $75,000 on Robert's productive resources.

  • Fredrick Robertson, in contrast, spends over a decade as a starving artist working on a science fiction trilogy. The trilogy sells over 100 million copies. Based on book sales, Fredrick's book publishing company places an annual value of $10 million on Fredrick's productive resources.
Fredrick receives more income each year because the good he produces with his labor resources (best selling science fiction trilogy) is more highly valued by the public than the good (moderately priced computer programs) Robert produces with his labor resources.

VALUE ADDED =>


Recommended Citation:

VALUE, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2021. [Accessed: January 20, 2021].


Check Out These Related Terms...

     | satisfaction | consumer sovereignty | incentive | contributive standard |


Or For A Little Background...

     | second rule of subjectivity | opportunity cost | efficiency | scarce resources | unlimited wants and needs | wants | needs |


And For Further Study...

     | economics | scarcity | three questions of allocation | distribution standards | seven economic rules | political views | utility | diamond-water paradox | demand price | supply price | consumption | derived demand |


Search Again?

Back to the WEB*pedia


APLS

RED AGGRESSERINE
[What's This?]

Today, you are likely to spend a great deal of time strolling around a discount warehouse buying club looking to buy either a wall poster commemorating next Thursday or a pair of gray heavy duty boot socks. Be on the lookout for telephone calls from former employers.
Your Complete Scope

This isn't me! What am I?

There were no banks in colonial America before the U.S. Revolutionary War. Anyone seeking a loan did so from another individual.
"Act well at the moment, and you have performed a good action for all eternity."

-- Johann Kaspar Lavater

UTP
Unfair Trade Practice
A PEDestrian's Guide
Xtra Credit
Tell us what you think about AmosWEB. Like what you see? Have suggestions for improvements? Let us know. Click the User Feedback link.

User Feedback



| AmosWEB | WEB*pedia | GLOSS*arama | ECON*world | CLASS*portal | QUIZ*tastic | PED Guide | Xtra Credit | eTutor | A*PLS |
| About Us | Terms of Use | Privacy Statement |

Thanks for visiting AmosWEB
Copyright ©2000-2021 AmosWEB*LLC
Send comments or questions to: WebMaster