Question

Speculate on how you think A. Marshall would respond to the following question: Do pearls have value because people dive for them, or do people dive for pearls because pearls have value? Why?

Answer 1

The economist would respond positively in both the cases.

The economist highlighted only on the material part of economics – welfare could only be attained if an item has value and people chasing for such item can able to value their chasing. Since spending depends on earnings, people having such affordability should certainly get value out of that item.

The economist did not consider scarcity of resources, which is very important here. Pearl gets value and becomes worthy because its supply is limited throughout the world. People feel to have it in their possession (get welfare value).