Theory of value

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Theory of value is an area of study within economics concerned with what things are worth, and why they are worth what they are worth.

Theories of value include:

Adam Smith states there are two types of value, value in use, and value in exchange, and gives as an example,

Nothing is more useful than water: but it will purchase scarce any thing; scarce any thing can be had in exchange for it. A diamond, on the contrary, has scarce any value in use; but a very great quantity of other goods may frequently be had in exchange for it. [1]


References

  1. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, Of the Origin and Use of Money, Book I, Chapter 4, Paragraph 13, First Edition 1776.
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