Explain exchange value and use value of a product

In political economy and especially Marxian economics, exchange value (German: Tauschwert) refers to one of four major attributes of a commodity, i.e., an item or service produced for, and sold on the market. The other three aspects are use value, economic value, and price.Thus, a commodity has: a value (note the link is to a non-Marxian definition of value)

a use value (or utility)

an exchange value

a price (it could be an actual selling price or an imputed ideal price)

These four concepts have a very long history in human thought, from Aristotle to David Ricardo,[2] becoming ever more clearly distinguished as the development of commercial trade progressed but have largely disappeared as four distinct concepts in modern economics. This entry focuses on Marx's summation of the results of economic thought about exchange-value.

Use value (German: Gebrauchswert) or value in use is the utility of consuming a good—the want-satisfying power of a good or service in classical political economy.[1] In Marx's critique of political economy, any product has a labor-value and a use-value, and if it is traded as a commodity in markets, it additionally has an exchange value, most often expressed as a money-price.[2] Marx acknowledges that commodities being traded also have a general utility, implied by the fact that people want them, but he argues that this by itself tells us nothing about the specific character of the economy in which they are produced and sold.

What are the main problem of economy? Explain one of them

 The first central problem of an economy is to decide what goods and services are to be produced and in what quantities. This involves allocation of scarce resources in relation to the composition of total output in the economy. Since resources are scarce, the society has to decide about the goods to be produced: wheat, cloth, roads, television, power, buildings, and so on. Once the nature of goods to be produced is decided, then their quantities are to be decided. How many tonnes of wheat, how many televisions, how many million kws of power, how many buildings, etc. Since the resources of the economy are scarce, the problem of the nature of goods and their quantities has to be decided on the basis of priorities or preferences of the society. If the society gives priority to the production of more consumer goods now, it will have less in the future. A higher priority on capital goods implies less consumer goods now and more in the future. But since resources are scarce, if some goods are produced in larger quantities, some other goods will have to be produced in smaller quantities.

Suppose the economy produces capital goods and consumer goods. In deciding the total output of the economy, the society has to choose that combination of capital goods and consumer goods which is in keeping with its resources.

Describe the difference between material and non material production?

Material Production, Sphere of

the economic sphere that embraces all the branches of material production in which material goods are created for the satisfaction of certain human needs, both personal and social. The differences between the sphere of material production and the nonproduction sphere are fundamental. A clear distinction between the various branches of the sphere of material production and all other types of activity is essential, for otherwise the volume of the total social product and national income cannot be correctly determined.

National income is generated in the various branches of material production. In the socialist countries, it is calculated on the basis of production data for the various branches of the sphere of material production. Expenditures for the upkeep of the nonproduction sphere are made at the cost of the surplus product created by the labor of workers in the sphere of material production—first, through the state budget (for example, for such activities as education, public health, and administration) and, second, at the cost of the personal incomes of the working people, who in exchange for part of their income receive a special use value—services.

The labor of workers employed in the sphere of material production is productive labor.

Soviet statistics include, within the sphere of material production, industry, agriculture, forestry, construction, transportation and communications (that part that provides services to material production), trade and public catering, material and technical supply and marketing, procurement, and other branches of material production, such as publishing, motion pictures, sound recording, designing, the procurement of scrap metal and other usable waste, hunting, and the harvesting and primary processing of wild plants, fruits, mushrooms, seeds, and grasses.

The makeup of the various branches in the national economy is by no means static. As a result of the development of material production, technical progress, and the social division of labor, new branches of the national economy come into being, and the relationship between the sphere of material production and the nonproduction sphere change.