Write an informative note on paradox of values along with examples.

1.	Write an informative note on paradox of values along with examples.
Answer» Paradox of values – The concept of value paradox is introduced by Adam Smith. The term value has two meanings : (i) Value in use (ii) Value in exchange Some goods have greater value in use but smaller value in exchange e.g. water. However, some goods have smaller value in use but greater value in exchange e.g. diamond. So, paradox of value is also called as water-diamond dilemma. Greater value in use denotes high total utility whereas, greater value in exchange shows high marginal utility. Thus, the concept paradox of value is very useful to understand the concepts of utility i.e., Total Utility & Marginal Utility.

Answer»

Paradox of values – The concept of value paradox is introduced by Adam Smith.

The term value has two meanings :

(i) Value in use

(ii) Value in exchange

Some goods have greater value in use but smaller value in exchange e.g. water.

However, some goods have smaller value in use but greater value in exchange e.g. diamond.

So, paradox of value is also called as water-diamond dilemma.

Greater value in use denotes high total utility whereas, greater value in exchange shows high marginal utility.

Thus, the concept paradox of value is very useful to understand the concepts of utility i.e., Total Utility & Marginal Utility.

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