Why is it that things like bread and water which have high use values are cheap while on the other hand luxury items like diamonds are very expensive? This paradox was not solved until it became understood that people choose only a marginal unit - this loaf or this diamond. Value can be attached to a good only by individuals' desires to use it directly in the present or in the present expectation of selling to such individuals in the future. It is subjective only.
Part 2 of 14. Presented in 1986 at New York Polytechnic University.