HISTORY---> Adam Smith ( determined the real notion of price and value )

Wrote : The wealth of nations ( ex. The beavers and the deers, where the hunters had
simple instruments --> easy to describe their activity )

1 day of hunting --> 2 beavers

“ “ “ “ --> 1 deer Price exchange: P.beaver/ P.$
P.deer/P.$
Average productivity: Q/L = quantity/ labour

arbitrage condition=is the practice of taking advantage of a price difference between two or
more markets: striking a combination of matching deals that capitalize upon the imbalance, the
profit being the difference between the market prices.

Real prices and ideal prices refers to a distinction between actual prices paid for products,
services, assets and labour (the money that actually changes hands), and computed prices which
are not actually charged or paid in market trade, although they may facilitate trade.

Ideal prices, expressed in money-units, can be estimated, theorized or imputed for accounting or
calculation purposes, but, even although they may not apply to any actually traded product, asset
or service directly, they can nevertheless influence economic behaviour.

Exchange value isthe mea sure of how much one good is exchanged in terms of another, namely
what is now called relative price.

Cross Exchange rate: when weare given 3 currencies (A,B,C) and we konw the exchange rate A/
B and A/C...but what about B/ C?

The central concept of marginalism proper is that of marginal utility, but

marginalists following the lead of Alfred Marshall were further heavily
dependent upon the concept of marginal physical productivity in their
explanation of cost http://en.wikipedia.org/wiki/Marginalism
http://geography.about.com/od/populationgeography/a/malthus.htm
http://www.businessdictionary.com/definition/marginal-productivity.html
http://en.wikipedia.org/wiki/Debt-to-GDP_ratio