Minimum wage and the prices of different kinds of component goods and services will define the minimum price of the product. The base price is derived in the same way except that the instead of the minimum wage we use the wage of the provider of the good / service, which in turn is based on his Resource value. From the base price using Supply and Demand we finally arrive at the market price.
FREE dirt or air... 20 plentiful 15 common 10 not common, not rare 5 rare 1 extremely rare 0 dream on...
20 plentiful 15 commonly available 10 available at fairs 5 available in London 1 not available
20 everybody needs it 15 majority of people need it 10 some people need it 5 few people need it 1 almost nobody needs it
The actual wage (the amount of money/goods the worker gets from his actual work) is derived from the minimum wage (per day) using the Resource value of the provider of the good / service in question:
wage = minimum wage * (20 / Resource)^2 Resource Wage Resource Wage 20 1 10 4 19 1.1 (=20^2/19^2) 9 5 18 1.2 8 6.3 17 1.4 7 8 16 1.6 6 11 15 1.8 5 16 14 2 4 25 13 2.4 3 44 12 2.8 2 100 11 3.3 1 400
The prices are calculated as follows:
In medieval times it took 150 cubic metres of charcoal to produce just 10 kg of iron. It took a weaponsmith about a week to make a basic sword, and about a month to make a decent sword. The process of forging the blade would use 500 to 750 kg of charcoal. (That's half to three-quarters of a tonne of charcoal to make a single blade!). A mail hauberk took a similar time to make (about a month).
To produce a good sword one needs iron (5 kg, or 20 eu), wood (free), charcoal (750 kg, or 6 eu) and a weaponsmith with appropriate facilities (for a week). The minimum price for a sword is 20+6+1*6 = 32 eu (minimum wage = 1 eu per day). The minimum price is used as a check against longterm misuse: the working force won't hold for long if their wage goes below minimum wage - they can't buy enough food.
However the services of a good weaponsmith have resourcevalue of 8 so that the wage part of the price increases to 6 days * 1 eu/day * (20/8)^2 = 37.5 eu. Similarly one might calculate the prices of other components. The base price is then the sum of these component prices, or in this case 64 eu. The resourcevalue for the sword is the minimum of the resourcevalues of the components involved, or 8 in this case.
The market price may differ from the base price. Given the base price of the 'basic sword' of 64 eu we assume that the supply and the demand are in balance, let us say both are 5. Normally in the case of not-common goods resource and supply tend to be equal, but let's assume it is peace time and the existence of so many weaponsmiths is explained by a longterm war just 10 years ago. For common goods (like unskilled labour) the resources can far exceed the demand.
Now, if the sword suddenly becomes fashinable the demand will go up to say 10. The market price would then be 64*10/5 = 128 eu. After a time, of cource, the supply would catch up upto the resource base 8 and the market price would drop to 64*10/8 = 80 eu.
Now if in the neighboring country the weaponsmiths notice this profitable situation and start supplying their own swords to the market, the supply could increase to 11 (because of the imported goods - this is a Huge change btw.) and the market price would drop to 58 eu. Pretty quick the smiths will notice that the profit from swords is no more as good as it was and they will turn their attention to other goods. The supply balances with the demand and market price equals the base price again (64 eu). After yet awhile the market becomes flooded, the swords go out of fashion and the demand (and the supply) will drop back to 8 or below.
In the extreme case of the land suddenly being full of available swordsmiths with unlimited resources the resourcevalue for them would go to 20 and the base price of swords would be calculated using the minimum wage, or the base price would equal minimum price 32 eu. Now, if the demand for the swords would suddenly drop to 2 while the supply were 10, the market price would in principle be 6.4 eu (=32*2/10), but in fact it would be limited by the minimum price to 32 eu, although undoubtably there would be some who would sell a few swords even cheaper just to get some of the invested money back.
A sharp reader may have noticed that the changes in demand, supply, resources and finally prices offers valuable possibilities for someone with a little bit intelligence, enough money to start with and a slick tongue. That is what is called business.
Good Resource Base price Supply Demand Market price (raw materials) ----------------------------------------------------------------------- Food (-> minimum wage) Wages (resourcevalues & examples) Raw materials Common items Not-common items & services Luxury items & services Rare items & services