What is fungibility in economics?

Fungibility is the ability of a good or asset to be interchanged with other individual goods or assets of the same type. Fungible assets simplify the exchange and trade processes, as fungibility implies equal value between the assets. Fungibility is the ability of a good or asset to be readily interchanged for another of like kind.

What are the key takeaways of fungibility?

Key Takeaways. Fungibility is the ability of a good or asset to be interchanged for another good or asset of like kind. Like goods and assets that are not interchangeable, such as owned cars and houses, are non-fungible.

What is the difference between fungibility and substitution?

Whereas in fungibility, the substitution can occur with anything identical in worth, quality, form, or function. Fiat money trade is one of the best examples of fungibility as the value of a currency remains the same everywhere.

Are goods fungible or non-fungible?

Whether goods, assets, or commodities are fungible depends on the possibility of their interchange with different units of the same item without any effect. In other words, any noticeable difference in the quality of products of the same units affecting their value and utility will make them non-fungible.