Question

Identify and explain the concept from the given illustration:

Nilesh purchased ornaments for his sister.

Answer 1

Concept: Value in exchange/Possession utility

Explanation:

1. The law of DMU explains the ‘paradox of values’ by showing the difference between the value in use and the value in exchange. Some commodities have high value in use, and some commodities have high value in exchange.
2. Possession utility arises when the ownership of goods is transferred from one person to another.