Inter-Commodity Trade-Offs
Given any two commodities or actions “A” and “B” –
- A particular amount of Consumer Effective Value can be obtained by various combinations of the two.
- The “Boundary of Indifference” represents the combinations of A and B that result in the same amount of Consumer Effective Value.
The Consumer “ought” to be indifferent between the various combinations of A and B along that boundary.
- Any combination “inside” that boundary is a “non-rational” combination. A consumer “ought” to prefer a combination along the Boundary to one inside of it.
- The slope of the Boundary is the Exchange-Value of A in terms of B, denominated in Health-Units. Different commodities/actions will deliver different amounts of Health Units per unit quantity. (For all the reasons why Effective Value is less than Intrinsic Value.)
In the real economy, there are an infinity of different commodity / action trade-offs.
The “Surface of Indifference” is an N-dimensional surface where any combination of commodities on that surface delivers a particular amount of Effective Value.
