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The economic value of a good or service has puzzled economists since the beginning of the discipline. First, economists tried to estimate the value of a good to an individual alone, and extend that definition to goods which can be exchanged. From this analysis came the concepts value in use and value in exchange. Value in use describes what I have to give up to obtain more of a good. I know I will have to reduce my leisure, consumption, savings or investment to obtain more of something. That is the basic trade-off in value. Value in exchange describes what I have to trade to obtain more of a good, and describes the opportunities available in the market. Wealth maximization predicts that a person will choose to obtain the good or service in the place where it is cheapest, where the amount given up is the least. Sometimes, it is cheapest to produce it yourself, and other times, it is cheapest to buy it.
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