Value is a power of attraction in a good which leads men to choose it in preference to other goods. A good has such power only when its supply is limited relatively to the demand for it. Value is of two kinds, value in use and value in exchange. Value in use was discussed in an earlier chapter. Value in exchange may be defined as the power which ownership of a good gives to its owner of securing other goods in exchange for it. Or more briefly, it is power in exchange. Value in use and value in exchange are simply two different phases of the same thing. When the term value is used in economics without qualification, value in exchange is usually understood.

In an exchange of goods the quantity of another good that must be given for a particular good is the price of the latter. Since the prevailing form of exchange is that of goods for money, the price of a good has come to mean the amount of money for which it will exchange.