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November 09, 2013, 04:38:10 AM |
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From the Mises institute
"With subjective preferences, there is no "measurement" going on. Modern economics can explain consumer behavior without assuming any underlying units of "utility." We only need to assume that people know how to rank units of goods in order from most to least preferred.
But when we switched from individual, subjective valuation to the market's objective valuation, things were different. Jill was no longer reporting on her personal taste, but rather on her estimate of what prices she could fetch if she sold the two items. The prices are denominated in money, which can be expressed in cardinal units. In that sense, money prices measure market exchange value."
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