Economics Dictionary of ArgumentsHome
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| Terms of trade: Terms of trade in economics measure the ratio between a country's export prices and import prices. It indicates the relative value of a nation's exports compared to its imports, reflecting trade advantages. An improvement in terms of trade means a country can import more for a given level of exports, enhancing economic welfare. See also International Trade._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Murray N. Rothbard on Terms of Trade - Dictionary of Arguments
Rothbard III 102 Terms of trade/terms of exchange/Rothbard: (…) [in exchange] each individual values more highly the good he gets than the good he gives up. Otherwise, the exchange could not be made. Rothbard III 103 Therefore, for each exchange there is a double inequality of values, rather than an equality, and hence there are no “equal values” to be “measured” in any way.(1) The question then arises: Are there any principles that decide the terms on which exchanges are made? Price: The price is the rate of exchange between two commodities expressed in terms of one of the commodities. Exchange/trade/Rothbard: the object of all action is to maximize psychic revenue, and to do this the actor tries to see to it that the psychic revenue from the action exceeds the psychic cost, so that he obtains a psychic profit. This is no less true of interpersonal exchange. Revenue: The object in such an exchange for each party is to maximize revenue, to exchange so long as the expected psychic revenue exceeds the psychic cost. The psychic revenue from any exchange is the value of the goods received in the exchange. Rothbard III 104 This is equal to the marginal utility to the purchaser of adding the goods to his stock. Costs: More complicated is the problem of the psychic costs of an exchange. Psychic costs include all that the actor gives up by making the exchange. This is equal to the next best use that he could have made of the resources that he has used. Rothbard III 105 Goods: It must be reiterated that a good is not defined by its physical characteristics, but by the equal serviceability of its units to the actor. >Price/Rothbard. 1. Cf. Ludwig von Mises, Human Action (New Haven, Conn.: Yale University Press, 1949),, pp. 204—06; and Menger, Principles of Economics, pp. 192-94, 305-06._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977 |
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