Skip to content

IAI Actuarial Core Principles · Business Economics · Main economic schools and their key features

In Marxian economics, the 'labour theory of value' holds that the value of a commodity is determined primarily by which of the following?

In Marxian economics, value is determined by the socially necessary labour time needed to produce a commodity under average conditions of skill and productivity. It is not set by marginal utility, wages, raw material scarcity or the pricing decisions of dominant firms.

  1. AThe socially necessary labour time required to produce itCorrect
  2. BThe marginal utility the last buyer derives from it
  3. CThe money wage paid to the workers who made it
  4. DThe scarcity of the raw materials used in making it
  5. The price set by the largest firm in the market

Explanation

Marx argued that a commodity's value reflects the socially necessary labour time embodied in it, meaning the labour needed under average conditions of skill and productivity. Marginal utility is the neoclassical explanation, and wages or scarcity do not define value in this framework.

Did you get it right without looking?

One question tells you little. A timed set on Main economic schools and their key features shows your real accuracy, how long you take and where you lose marks.

Practise Main economic schools and their key featuresFree diagnostic mock

More Main economic schools and their key features questions