Assume a foil packet of mustard whose only use is to potentially turn a plain hotdog/bun combination into a hotdog/bun combination with mustard.

Given the Austrian Subjective Theory of Value, assume that you subjectively rank the end of consuming a mustard-hotdog above the end of consuming a plain-hotdog on your subjective, ordinal scale of value.

For this problem, asssume that no markets or exchange values exist.

Under these conditions, the actual mustard-hotdog and the plain-hotdog are first or lower order goods, capable of directly satisfying the corresponding consumption ends.

Since the foil packet of mustard can be added to the plain-hotdog to create a mustard-hotdog, it must be considered as a higher order good.

What is the subjective value of the foil packet of mustard, the higher order good?

The first thing that happens when mustard is added to the plain-hotdog is that we no longer have a plain-hotdog. Because of this sacrifice, the plain-hotdog was the opportunity cost of creating the mustard-hotdog.

We now have a mustard-hotdog that has taken the place of the lower ranked, lower value, plain hotdog. The degree to which it is perceived that we now have a higher valued hotdog is entirely due to the mustard.

Accordingly, we can associate this augmentation of value with the mustard foil packet and call it an 'opportunity profit.' This is the subjective value of the mustard packet.

 IMPLICATIONS -

1.  From its description, we would assume that a purely ordinal subjective theory of value would only be concerned with ordered rankings, i.e. which is higher ranked, not by how much.

However,  as we can see from above, the degree of preference for one good or end over another is vital for determining the subjective value of a higher order good, in this case the mustard.

This doesn't mean that any counting or measuring or arithmetic operation is required, but simply that the degree of preference can be used to determine choice and action.

2. It is widely believed, within other contexts, that the price of a higher order good is imputed from the subjective value of a first or lower order good.

   Above, it has been shown that  the subjective value of a higher order good can only be determined if we have both the subjective value of the first or lower value good, and its opportunity cost.

  You may greatly prefer a mustard-hotdog, or just slightly prefer it. This is vital to the subjective value of the mustard packet.

  It seems to me untenable to believe that the price of a higher order good can be imputed from the subjective value of the first or lower order good alone while the subjective value needs the opportunity cost as well.

Regards, Don