Economic Value Measure
An Economic Value Measure is a value measure that is an economic measure (which involves a resource allocation decision task of scarce resources).
- AKA: Value (Economics).
- Context:
- It can (typically) relate to an Economic Asset or an Economic Act (such as an economic transaction).
- Example(s):
- Counter-Example(s):
- an Moral Value.
- a Cultural Value.
- See: Personal Value, Goods (Economics), Service (Economics), Currency, Use Value, Exchange Value, Price, Financial Transaction, Theory Of Value (Economics).
References
2013
- (Wikipedia, 2013) ⇒ http://en.wikipedia.org/wiki/Value_(economics) Retrieved:2013-12-27.
- Economic value is a measure of the benefit that an economic actor can gain from either a good or service. It is generally measured relative to units of currency, and the interpretation is therefore "what is the maximum amount of money a specific actor is willing and able to pay for the good or service"?
Note that economic value is not the same as market price. If a consumer is willing to buy a good, it implies that the customer 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.
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 extend that definition to goods which can be exchanged. From this analysis came the concepts 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 a certain amount of a good, so too does the seller reveal what it costs him to give 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 condition is worth relative to other objects or conditions. Economic values are expressed as "how much" of one desirable condition 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 subject of a “Theory of Value." Value theories are a large part of the differences and disagreements between the various schools of economic theory.
- Economic value is a measure of the benefit that an economic actor can gain from either a good or service. It is generally measured relative to units of currency, and the interpretation is therefore "what is the maximum amount of money a specific actor is willing and able to pay for the good or service"?