You don’t quite seem to appreciate that I was responding to this…
“On your view, the buyers on seeing a better product should pay an even higher price!!! Don;t you see that this is impossible in practice AND that it would result in gross mis-allocation of resources.”
In my scenario, the point of spending money is to help determine how the island’s limited labor should be divided between harvesting coconuts and catching fish.
Let’s say that your true preference is for 8 people to catch fish and 4 people to harvest coconuts. Do you agree that the amount of money that you spend on coconuts and fish should accurately reflect how you want the labor to be divided?