Question

Define the following term.

Value

Answer 1

The term ‘Value’ in economics is used in two senses:

• Value in use (or use value) means want satisfying capacity or usefulness of the commodity. In fact, this is another name of utility. The use value of a commodity can partly be contributed by nature and remaining by the human factor. For example, the use value of a car is partly contributed by natural resources such as steel, rubber, etc. and partly by human labour.
• Value in exchange (or the exchange value of a commodity) implies its exchange value in terms of other commodities. For instance, if 1 kilogram of sugar can be exchanged for 2 kilograms of wheat, then the value of 1 kilogram of sugar will be 2 kilograms of wheat. Value is relative and not absolute. It always expresses the relationship between two commodities.