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COMPLEMENT-IN-PRODUCTION: One of two goods that are produced jointly using the same resource -- that is, the production of one good automatically triggers the production of the other. The terms "joint products" or "by-products" are two terms commonly used for complements-in-production. A complement-in-production is one of two alternatives falling within the other prices determinant of supply. The other is a substitute-in-production. An increase in the price of one complement-in-production causes a increase in supply of the other. Complements-in-production are goods produced jointly from the same resource or input. This typically happens when the resource in question has parts that can be separated into different products. One example is the production of two goods -- beef and leather -- from one resource -- cattle. Another complement in production example is lumber and sawdust, both produced from a single tree.
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                           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 OwnThe 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 ValueThe 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.
Recommended Citation:VALUE, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2024. [Accessed: October 21, 2024].
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