Final answer:
Value in economics is determined by scarcity and utility. Scarcity refers to the rarity of a product, and utility is the usefulness it provides. Consumers and producers collectively determine the price of goods and services based on these factors.
Step-by-step explanation:
Value in economic terms is determined by two main factors: scarcity and utility. Scarcity refers to the limited availability of a resource, which can drive up its value. For instance, a rare diamond has more value because it is scarce. Utility, on the other hand, is the usefulness or satisfaction a product or service provides to a consumer. If a product has high utility, a consumer will derive greater satisfaction from it and thus it may have a higher value for that individual. In assessing value, personal preferences play a crucial role as they influence the perceived utility of an item. For example, one person may assign great value to a collection of DVDs because of the entertainment utility, while another person may find little to no value in them.
When examining the influence of utility and scarcity on value, it's evident that they work together to determine an economic value expressed in money. Consumers and producers interact to determine the price of goods and services based on these principles. This value assessment can also be seen in how employers determine income, offering higher wages for skills that are in high demand (scarce) and offer a lot of utility (usefulness to the company). While money often acts as a medium to express value, certain invaluable elements of life, such as love or friendship, defy such quantification.