• Unit 1: Economic Value

    In the first unit, we cover the fundamental basic building blocks of the Austrian school's approach to economics, beginning with addressing the basic questions: what is a good, what is utility, and what is value? The starting point of Austrian economics is the insight of economist Carl Menger that all value is subjective. There is no value without the individual making the valuation. We also discuss the concept of marginal analysis and what it means, how human economic decisions are taken at the margin, and how this can help us resolve the famous water-diamond paradox, which asks: if water is so essential and valuable to humans, how come it is so much cheaper than diamonds, which are not essential?

    Completing this unit should take you approximately 3.5 hours.


    • Upon successful completion of this unit, you will be able to:

      • Understand the difference between subjective and objective definitions of value.
      • Differentiate between economic goods like education and non-economic goods, like air.
      • Describe scarcity, why economic goods have opportunity costs related to scarcity, and how humans economize due to scarcity.
      • Explain how subjective value enables trade to take place.
      • Explain how subjective valuation happens at the margin and how it differs from objective valuation in the aggregate.
      • Describe the law of diminishing marginal utility.

    • 1.1: Goods, Value, and Scarcity Lecture

      • 1.1: Lecture Page

        Watch this lecture to examine the concept of a good and the centrality of scarcity to understanding human action. In the video, Dr. Saifedean describes the difference between economic and non-economic goods, and explains the importance of scarcity and why humans must value economic goods. Topics covered include:  Economic goods • Non-economic goods • Opportunity cost • Economizing • Subjective value • Value and free exchange • Ordinal valuation • Cardinal valuation • Marginal analysis • Law of diminishing marginal utility


      • 1.2: Goods, Value, and Scarcity Discussion

        • 1.2: Discussion Page

          Since you have watched the video lecture for unit 1, it's time to watch Dr. Saifedean moderate a discussion on the unit's theme by addressing questions asked by your fellow classmates. As you watch the discussion unfold, take notes to help you retain information. Make sure you watch the entire discussion seminar video, otherwise you may skip over important points. To get the best learning experience and mastery of the major concepts covered in this unit, you'll want to watch all videos in their entirety,


      • 1.3: Goods, Value, and Scarcity Review

        • 1.3 Review: Introduction to the fundamental concepts of economics Page

          This resource contains a summary of some of the key concepts discussed in unit 1. Don't skip ahead - the information on this page is easier to understand if you have watched the video lecture and discussion seminar video in their entirety. Bookmark this resource to keep it handy during studying.