MARKET PRICE

'Market price' is an economic concept with commonplace familiarity; it is the price that a good or service is offered at, or will fetch, in the marketplace; it is of interest mainly in the study of microeconomics. Market value and market price are equal only under conditions of market efficiency, equilibrium, and rational expectations.

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Other measures of value

Classical economics

Other measures of value

Market price is just one of a number of ways of establishing the monetary value of a good or a transaction. Others include historical cost, the resource cost of the good or service, an appraised value (such as the discounted present value), economic value, intrinsic value, and others.

Classical economics

Main articles: Supply and demand

Many second order factors bear on market price in practice, not least the availability of market information to suppliers and potential purchasers.
In classical economics, the market price of a good or service is established in relation with demand, and in inverse relation with supply, which is to say the market price decreases as supply increases; increases as supply decreases; increases as demand increases; and decreases as demand decreases. The actual market price will establish a particular price point, valid for a short period which is the meshing of current demand and supply.