# Utility Theory of Value According to the utility theory of value, **the value of a good or service is solely dependent on how much use (or utility) consumers can (potentially) receive from it.** It is important to note that utility here refers to total (or potential) utility, and not [[Marginal Utility]]. ^dtgwo7 The utility theory of value directly contradicts the [[Labor Theory of Value]] and the [[Cost of Production Theory of Value]], according to which consumers' utility has no impact on price. **This theory fails to provide a solution to the [[Diamond-Water Paradox]]** because under it water should still be more valuable than diamonds. **However, this does not make the utility theory of value fundamentally wrong, it does however limit it to determining price when exchanging a totality of a good (all of world's water is more valuable than all of world's diamonds), or when both goods being traded are similarly scarce** (thirsty man in a desert will give up diamonds for water). The [[Subjective Theory of Value]] solves this problem by using [[Marginal Utility]], thus providing a universal theory of value.