What decides the value of goods and services?
The pre classical and ancient economists describe free gifts of natures like land as what decides value.
But according to Adam Smith the value of goods and services is decided by the labor and efforts put into making those goods but in the long run adam Smith later recognizes that other factors of production are also important in deciding the value of goods but labor is the main player.
Karl Marx on the other hand also agreed with Adam Smith on some aspects but has his own criticism.
According to Karl Marx theory The value of goods is the labour time required to produce it.
But he also distinguished between usefulness of a commodity and the exchange value but didn't fail to criticize the exploitation of labor by capitalists
Therefore according to Karl Marx value comes from labor and capitalist profit comes from exploitation of labor known as surplus profit.
The neoclassical economics completely rejected the labor theory and placed value of goods on utility.
Utility simply means satisfaction from consuming goods or Services.
The Neoclassical argued that value is subjective based on human preferences and marginal utility (additional satisfaction).
So quick question for you all
if it takes 2 hours to make one chocolate and
1 hour to make one candies
Should chocolate be more expensive than candies because of the number of hours put
what if people love candies more than chocolate should candies be more valuable because people prefer it to chocolate. Despite the fact it takes less time to make than candies