Subjective theory of value

The theory that economic value arises from individuals’ preferences and perceived usefulness, rather than residing intrinsically in goods or being determined by production costs alone.

Marginal utility: The additional satisfaction or benefit attributed to consuming one more unit of a good. It connects an individual’s changing preference for units to their valuation.
Marginal Revolution: The late nineteenth-century shift in economics toward marginal analysis of choices, prices, and resource allocation. It established marginal utility as a central explanation of economic value.
Preferences: An ordering of possible outcomes or goods according to an agent’s choices or judgments. Individual preferences are the basic source of valuation in the theory.
Consumer choice: The decisions individuals make among goods and services given their preferences and constraints. Choices reveal how people rank available alternatives under the theory.
Cost-of-production theory of value: A theory that explains a good’s value through the costs required to produce it. It contrasts directly with accounts that ground value in buyers’ preferences.
Ordinal utility: A representation of preferences that ranks options without measuring the intensity of satisfaction. It shows that subjective value can guide choices without a common numerical scale.
Carl Menger: An Austrian economist who founded the Austrian School and developed a subjective account of economic value. His 1871 work gave a systematic account of value based on individual needs.
Utility: A formal representation of how desirable outcomes are to an individual within an economic model. Utility expresses preference-based rankings without implying an objective property in goods.
Water–diamond paradox: The puzzle that water is essential yet often cheap, while diamonds are less useful yet expensive. Marginal utility resolves the apparent gap between usefulness and market value.
Marxian value theory: Karl Marx’s account of commodity value based on socially necessary labor time. It supplies a prominent labor-centered alternative to subjective value.

Linked from 10 pages