Every science has its own language. Economics has its own language. There are certain terms which are used in a special sense in economics. So we must understand the meaning of some basic concepts like wealth, goods, income, value, price and market. If we do not understand their meaning properly, it may result in a lot of confusion.
In ordinary speech, when we refer to wealth, we mean money. But in economics, it has a special meaning. It refers to those scarce goods which satisfy our wants and which have money value. We may consider anything that has money value as wealth in economics.
All economic goods have value-in-exchange. So wealth includes all economic goods. Wealth has been defined as 'stock of goodsexisting at a given time that have money value'.
The following are the characteristics of wealth :
(1) It must possess utility. It must have the power to satisfy a want. As Marshall says 'they must be desirable'.
(2) It must be limited in supply. For example, air and sunshine are essential for life. We cannot live without them. But we do not consider them as wealth because they are available in large quantities. Such goods are known as free goods.
(3) Wealth should be transferable. That is, it should be possible for us to transfer the ownership from one person to another.
(4) It must have money value.
(5) It may be external. For example, the goodwill of a company is external wealth.
Utility, scarcity and transferability are thus important characteristics of wealth.
Wealth may be classified into a) personal wealth (individual wealth) b) social wealth (collective wealth), c) national wealth (a + b) and d) cosmopolitan wealth (e.g. ocean).
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