We thoroughly check each answer to a question to provide you with the most correct answers. Found a mistake? Tell us about it through the REPORT button at the bottom of the page. Ctrl+F (Cmd+F) will help you a lot when searching through such a large set of questions.
What determines the value of an item?
- (A) the amount of goods that are produced
- (B) the capital required to build the factory
- (C) the unlimited wants of the consumers
- (D) the resources consumed in production
Answer: the amount of goods that are produced. The amount of goods that are produced determines the value of an item.
The value of an item is determined by how much it cost to produce the item. However, the more items that are produced, the less the value of an item tends to be (as costs like electricity, water, rent, etc. are spread over more items), and thus the value of an item is partially determined by the amount of goods that are produced.
Money has a value that is determined, just like other goods, by the principle of demand and supply. This idea appears to be so straightforward that early students of the subject concluded that a change in the amount of items without any variation in money volume, or per contra, a modification in money volume without change in the quantity of goods must result in a
Thus there emerged an abstract mathematical theory called the quantitative theory, which John Stuart Mill defined in these words:
“the value of money, other things being equal, varies inversely as its quantity, every increase of quantity lowering the value and every reduction boosting it by a ratio precisely equivalent.”
This idea has some validity, but in its usage to prices, it has been misinterpreted and perverted. It’s been taken to mean that as the quantity of money in a community increases, so will the costs of all goods.
Was this helpful?
The Quizzma Team is a collective of experienced educators, subject matter experts, and content developers dedicated to providing accurate and high-quality educational resources. With a diverse range of expertise across various subjects, the team collaboratively reviews, creates, and publishes content to aid in learning and self-assessment.
Each piece of content undergoes a rigorous review process to ensure accuracy, relevance, and clarity. The Quizzma Team is committed to fostering a conducive learning environment for individuals and continually strives to provide reliable and valuable educational resources on a wide array of topics. Through collaborative effort and a shared passion for education, the Quizzma Team aims to contribute positively to the broader learning community.