Value (economics)

In economics, economic return is the measure of a benefit proposed by a good or service to an economic agent. It is loosely measured relative to units of currency, and the interpretation is therefore "what is the maximum amount of money a particular actor is willing together with able to pay for the service or service"?

Among the competing schools of economic concepts there are differing theories of value.

Economic value is not the same as market price, nor is economic value the same object as market value. if a consumer is willing to buy a good, it implies that the client places a higher value on the good than the market price. The difference between the value to the consumer and the market price is called "consumer surplus". it is easy to see situations where the actual value is considerably larger than the market price: purchase of drinking water is one example.

Overview

The economic value of a good or service has puzzled economists since the beginning of the discipline. First, economists tried to estimate the value of a good to an individual alone, and come on that definition to goods that can be exchanged. From this analysis came the abstraction value in use and value in exchange.

Value is linked to price through the mechanism of exchange. When an economist observes an exchange, two important value functions are revealed: those of the buyer and seller. Just as the buyer reveals what he is willing to pay for aamount of a good, so too does the seller reveal what it costs him to afford up the good.

Additional information about market value is obtained by the rate at which transactions occur, telling observers the extent to which the purchase of the good has value over time.

Said another way, value is how much a desired object or assumption is worth relative to other objects or conditions. Economic values are expressed as "how much" of one desirable given or commodity will, or would be given up in exchange for some other desired condition or commodity. Among the competing schools of economic theory there are differing metrics for value assessment and the metrics are the forwarded of a theory of value. Value theories are a large element of the differences and disagreements between the various schools of economic theory.