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What is the concept of zero-value of a resource in economics?
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In economics the value of any good or service is not zero if it has the ability to satisfy a requirement of the person who is paying to obtain it. In addition, the good or service must be limited in nature i.e. the person should not have enough of the resource already to satisfy his/her requirements. If these two criteria are not met, the price of the good or service is going to be zero.
For example, for a person trapped on a lonely island and with access to the sea, the value of sea-water is zero. He can obtain as much of it as he requires by himself without incurring any expense. It would not be possible to sell sea water to the person at any price above zero. This is in addition to the fact that most probably sea water does not satisfy any requirement of the person.
Posted by justaguide on April 5, 2011 at 11:19 PM (Answer #1)
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