Market value

Market value, also called market price, refer to the price for which a good or service is currently being sold at in the open market.

Goods are bought and sold based on current market value. In most Western retail settings, buyers buy goods that have been marked up, resulting in better profit margins for the seller. In other situations, such as real estate, market savvy buyers can haggle prices and get a discount, even purchasing at a price lower than an item’s current market value.

A mark up in price does not always mean more profit for the seller. The item on sale could have actually been bought by the seller when its market value was higher than the current market value. That is why they set a price higher than the current market price.

In classical economics, the market price of assets is determined by supply and demand. The market price is directly proportional to demand and inversely proportional to supply. However, this simplistic way of computing for market price is not accurate in real life. Other factors, such as historical and resource cost and intrinsic value, should be considered.

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