A good is produced by human. Human used to create goods by hunting, planting, and collecting. Human added values to the raw materials by using our labour. Wood can be used to heat up the temperature when we burn it. As we use it to make a chair, the physical status of the wood changed, also changed the function and value of the wood. If we want to exchange the chair with something else, we must find something with the same value.
Human give value to a good and define the value of a good. The goods being exchanged must have the same value. Nowadays, we have currency to help us make the exchange process more simple. On the surface, we are exchanging our currency and goods, but the actual things we give is our labour and the things we get is other people’s labour. The exchange of goods is actually the change of value. Sometimes we exchange things like pearls, diamonds, and gems. They are not functional and people could not produce extra value with them. But people value them a lot and are willing to exchange them.
This is similar to the concept of inferior goods and normal goods we discussed in microeconomics. Normal goods are mostly functional and have their value all the time. Inferior goods have high prices, but the value of them are only produced during exchange, imagine when Robinson was on the island, he will definitely choose those necessities instead of luxuries.
