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’.

1. Use-value:

• The utility i.e. usefulness of consuming a good (commodity) is called its use-value.
• It refers to how useful does the good become in satisfying the need of the consumer. Use-value is the qualitative aspect of value.

Example:
Food, water, sunlight, etc. have very high use-value for everyone. However, material things like iron, wood, petrol, etc. have use-value only for people who get some benefit out of these commodities.

2. Exchange-value:

• Exchange is the practice of releasing right on something on a condition of receiving an equivalent in return.
• When a commodity/service is exchanged for another commodity/service than the worth of one unit of this commodity is measured in terms of the amount of other commodity for which it is exchanged. Such worth is called exchange-value.

Example:
If 1 kg of wheat can be exchanged for 1 kg of rice then the exchange value of 1 kg wheat is 1 kg of rice.
Relationship Between Use-value and Exchange-value