According to Prof. Taussig, “the value of a commodity in economics means its power of securing other commodities in exchange.” Simply put, value refers to the purchasing power of a good or its ability to be exchanged for something else in the market.
If a commodity cannot be exchanged, it is said to have no value in economic terms. A commodity has value only when it is in demand and exchangeable in the market.
Meaning of Value
In economics, value represents the importance or worth of a good in terms of its exchange power. Goods like food, clothes, or machines have value because they can be exchanged for money or other commodities.
However, some goods like fresh air or sunlight, though essential and valuable in use, have no exchange value because they are freely available.
Meaning of Price
The price of a commodity is the value-in-exchange expressed in monetary terms. It is the amount of money a buyer pays to obtain a good or service in the market.
Thus, while value represents the power of a good to be exchanged, price is the actual amount of money exchanged.
Difference Between Value and Price
| Basis | Value | Price |
|---|---|---|
| Meaning | The inherent worth or importance of a good. | The monetary expression of value in exchange. |
| Nature | Subjective – depends on perception and usefulness. | Objective – determined by market forces of demand and supply. |
| Measure | Cannot always be measured in money terms. | Always expressed in money. |
| Example | Fresh air has value but no price. | A bottle of mineral water has price because it is sold in the market. |
| Conditions | A commodity must be useful, scarce, and transferable to have value-in-exchange. | Price exists only when value-in-exchange is present. |
Conditions for a Commodity to Have a Price
A good must satisfy the following three conditions to have a market price:
- Utility: It must have the capacity to satisfy human wants.
- Scarcity: It should not be freely available in unlimited quantities.
- Transferability: It should be capable of being transferred from one person to another.
Goods that are neither scarce nor transferable, such as air and water, have value-in-use only but no value-in-exchange.
Conclusion
The concept of value and price forms a cornerstone of microeconomics. While value represents the usefulness or importance of a commodity, price denotes its market worth in monetary terms. Not every valuable good has a price — only those that are useful, scarce, and transferable qualify.
For students of agriculture and veterinary sciences, understanding this distinction helps explain market behavior, pricing of farm products, and consumer demand.
Explore more economics concepts on Pedigogy.com, Nepal’s leading platform for research-based education in agriculture and veterinary sciences. Visit our Economics section here.
Updated on 27 October 2025
