# Is there no equivalent exchange? [closed]

There is no equivalent exchange. I think it doesn't exist. The so-called equivalent exchange is imaginary. In exchange, one side always makes money while the other side loses money. For example, if you buy shoes with money, assuming that the cost of shoes is only one yuan, but the money you pay is 10 yuan, this is not an equivalent exchange. Right?

The buyer didn't know that the seller's shoes were only 10yuan, plus advertising and other guidance, the buyer bought shoes with 100yuan, so the seller made 90yuan. The seller is rich. So this is not an equivalent exchange.

• Voting to close because this is not a question. – dismalscience Jan 5 at 3:15
• If we consider both value and prices in terms of monetary units we can have situations where the subjective value of a good is worth more/less than or equal to its price. The answer provided by @1muflon1 is an excellent explanation. I think what you have defined a “equivalent exchange” is where you’re getting tripped up, what do you mean by it? – Brennan Jan 6 at 7:47
• @enbinzheng No, cost is not something complicated. It is exactly what it sounds like. If I buy 10 yuan of materials, and spend 2 hours, the cost is more than 10 yuan, isn't it, because it also cost time? If I can sell the shoes for 100 yuan, then I earned 45 yuan per hour. – user253751 Jan 7 at 11:10
• Yes, so where does this idea of "equivalent exchange" come in? define it – Brennan Jan 8 at 1:26
• I think this should be reopened. It's a basic question about economics. It can probably be answered by answering "Why don't sellers just make their prices $1000?" – user253751 Jan 8 at 10:31 ## 2 Answers The value is subjective. If the buyer values the shoes at 10 yuan and the seller values 10 yuan at 10 yuan then from economic perspective equal amount of value was exchanged (i.e 10 value of yuan embedded in paper notes for 10 value of yuan embedded in shoes) regardless of what were the costs of production costs. Also money just serves to solve double coincidence of wants ultimately people exchange just goods and services for another goods and services. In microeconomic exchanges like buying shoes money does not matter at all. Response to edit of a question: I think that your confusion stems from not understanding the definition of value. Goods in economics dont have value based on their cost of production but value is determined subjectively. That is if a shoe leather costs \$10 and labor used to produce shoe \$30 that does not mean that shoe has \$40 value. The value of shoe that costed \$40 to produce can be anything in range $$[0,\infty)$$. The value depends on the customer subjective valuation. If shoe that costed shoemaker \$40 is by all consumers valued at \$0 then that is the true value of the shoe. If all consumers believe that the shoe has value \$100,000 then that is it's true value.

Going back to the exchanges, which is your question about there can be only 4 kinds of exchange (where the world exchange implies that the transaction is voluntary i.e. no theft or something like that):

1. Both from seller and buyer perspective equal value is exchanged. That is both buyer and seller value shoe at exactly \$100. 2. From buyer perspective equal value is gain but from seller perspective more value is gained. For example, buyer values shoe at \$100 so buyer exchanges \$100 for the shoe, but seller only values the shoe \$40 so seller has \$60 gain in value. 3. from buyer perspective more value is gained but from sellers perspective equal value is gained. Buyer values the shoes at \$ 100 and seller only asks for \$40 and seller values the shoe at \$40.
4. both parties gain more value. Buyer values the shoe at \$100 and seller at \$ 40 but they agree on price \$50, so buyer gained \$50 of extra value and seller extra \$10 The case 1, and 4 can be seen in standard Demand and Supply diagram below At exactly equilibrium price where S=D the last buyer and last seller exchange exactly the same value as they both value the good at exactly the same price (case 1). Left of the equilibrium price both seller and buyer get surplus value (case 4). A case 2 and 3 could be showed on a Demand and Supply diagram where in the first case supply is flat and in a second case demand is flat (I did not wanted to add too many pictures to my answer so I left only this one I trust that you can imagine either of them being horizontal flat lines. Right of the equilibrium price no exchange is possible as in that area either buyer or seller would actually experience value loss from transaction. A sane person would never enter into exchange where the person would loose - in that case either the person is not rational or the person was coerced hence we are no longer taking about exchange but about theft or scam. To sum it up: In an exchange, which implies voluntary change of something for something else there cannot be any loss. There can be only equal exchange which is the minimum condition for exchange to occur at all, or there can be exchange where both, or one of the parties benefit. But there can be no losses. Empirically majority of exchanges involve exchange where both parties benefit, however since you are asking if there could be equivalent exchange the answer is yes, it is the marginal exchange on the market and all other previous exchanges had to be either mutually beneficial or equal for one side while being beneficial for the other side. • So in fact, the exchange is not equivalent. The buyer bought 10 yuan shoes with 100 yuan. So the seller got rich. – enbin zheng Jan 4 at 23:52 • @enbinzheng no they bought it for 10 yuan where did you get the 100 from? Regardless if the example would be 100 yuan if the consumer values it at 100 and the seller values yuan at its nominal value then the exchange is again equivalent 100 value imbedded in shoes for 100 value imbedded in money – 1muflon1 Jan 4 at 23:53 • I mean: the buyer paid$100 and bought \$10 shoes. So the seller got rich. – enbin zheng Jan 4 at 23:58
• @enbinzheng I updated my question in response to your edit which is based on the last comment so you will find answer there – 1muflon1 Jan 5 at 2:00
• @1muflon1 Sometimes it is best not to engage. – Giskard Jan 5 at 13:13

The seller's idea is different from the buyer's. The seller wants to make money, so the seller can't ignore the cost. The buyer does not know the cost of shoes, so the evaluation may not be accurate, and the seller will use various means (such as advertising, preferential, packaging, etc.) to interfere with the buyer's judgment, making its evaluation higher than the actual cost of the seller. So sellers try to realize unequal exchange.

• This is true, but buyers also try to realize unequal exchange. – user253751 Jan 6 at 15:52
• When both sellers and buyers try to make the exchange unequal, we hope that the exchange is approximately equal. Why are you buying 10 yuan shoes for 100 yuan? Find another store which sells them for 10 yuan. – user253751 Jan 6 at 15:54
• @user253751 Yes, but the information is asymmetric. – enbin zheng Jan 6 at 22:31
• Unfortunately yes. Information is asymmetric. You still have the choice to look for another store, make your own shoes, or make your own store. If you could open your own store next to their store, and sell the shoes for 70 yuan, you would make lots of profit! – user253751 Jan 7 at 11:12
• @user253751 I can choose other stores, and other stores also have asymmetric information. And I also need cars, houses, clothes, bread, and so on, so I ca n’t all open my own shop. – enbin zheng Jan 7 at 22:36