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# Value in Exchange

## Definition

The power of a commodity to command other goods in trade, representing its purchasing capacity rather than its utility, which determines how much of other commodities can be obtained through exchange.

## Source Chapter

Book I, Chapter 4

## Context

Smith distinguishes between value in use (utility) and value in exchange (purchasing power), noting that items with greatest utility like water often have little exchange value, while items with little utility like diamonds command high exchange value.

## Economic Domain

Exchange

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