• We often use the words ‘price’ and ‘value’ in our daily life. Most of the times we use both these words alternatively but to represent the same meaning.
• For example, we make statements like, ‘this jeans is expensive’, ‘this watch is valuable’, ‘this shoe has a high price’. When these statements are made they are made without differentiating between price and value. This is so because generally, a person believes price and value to be the same.
• In economics, the concept of price and value are different and so it is necessary to understand the concept of value.

Value:
The worth of a commodity in terms of other commodities, or in terms of money i.e. price is called value of that commodity.

Value can be explained from two viewpoints. They are:

1. From viewpoint of use i.e. ‘use-value’
2. From viewpoint of exchange i. e. ‘exchange-value’.

Price:

• If a commodity is exchanged for money then such monetary exchange-value is termed as ‘price’.
• Price means the exchange-value (or worth) of a commodity measured in terms of units of currency.