See Article History Utility and valuein economicsthe determination of the prices of goods and services. The modern industrial economy is characterized by a high degree of interdependence of its parts. The supplier of components or raw materials, for example, must deliver the desired quantities of his products at the right moment and in the desired specifications. In economies such as those of western Europe, North Americaand Japan, the coordination of these activities is done through the price system.
Profits, Prices and Value What is the source of profit? The philosophers and others now known as the classical political economists started by investigating two central economic questions: Profit is certainly a factor in economic growth.
Economic growth requires investment. Profit is both the goal of most investment activity and a major source of investment funds. And, since profit is itself one of the three forms of income, we cannot go very far in an investigation of either the distribution of income or economic growth without a grasp of the sources of profit.
Price Profit occurs when a firm sells a good or service for more than it cost to produce. So we should be able to understand profit by understanding the prices of the goods and services the company sells and the prices of the inputs, including labor, that the company buys.
However, the term price usually connotes something temporary. Price may rise or fall based on temporary shifts of demand or even on changes in the weather.
It did not take a professor of Moral Philosophy to analyze how a weather-induced reduction in the wheat crop drives up the prices of wheat and bread. So economists need a term that embodies the concept of the price that something would be if it were not for all these troublesome variations in demand, weather and so forth.
A twentieth century economist might use long-run equilibrium price to express this concept.
|Anything to add?||Value personal and cultural In sociology, value theory is concerned with personal values which are popularly held by a community, and how those values might change under particular conditions. Different groups of people may hold or prioritize different kinds of values influencing social behavior.|
|BREAKING DOWN 'Perceived Value'||Hardcover Oxford University Press recently released another entry into their series of Oxford Handbooks, this time the topic is value theory.|
|utility and value | Theories & Examples | attheheels.com||Profits, Prices and Value What is the source of profit?|
|What is 'Perceived Value'||Value personal and cultural In sociology, value theory is concerned with personal values which are popularly held by a community, and how those values might change under particular conditions.|
Other terms that have been used are natural price Adam Smithvalue-in-exchange, exchange value, exchangeable value and prices of production.
Generally, after warning the reader that we mean value in terms of what other things the good could be exchanged for value-in-exchange and not the inherent usefulness of the good in terms of meeting our needs or desires value-in-use, or use valuewe use the term "value.
It goes up and down with the tides. It is also subject to the more random movement of waves and other disturbances, yet these movements will gravitate around the level determined by the tides.
The tides, then, are analogous to value, even though the actual price at any moment will be higher or lower than the value. The Search for a Foundation Value lies at the core of the economic adjustment process.
If the actual price of something were above the value, the extra profits to be made would attract more firms into that industry leading to a greater supply and - eventually - lower prices; conversely, if the actual price of something were below the value, the losses - or sub-normal profits - would drive firms out of that industry leading to a smaller supply and - eventually - higher prices.
Thus value was identified as the element which organized the economic life of society, as the basis for deciding what to produce, how to produce it and who gets it. The problem, of course, was to understand how value itself was formed.
The search for a theory of value is really a search for a consistent foundation for economic theory. It may have limited immediate worth in answering questions of economic policy or understanding the day-to-day or even the month-to-month movements in various prices.
In fact, we can accomplish much of this without a consistent theory of value. A house without a foundation is of more immediate use than a foundation without a house.
But the classical political economists were looking at the economy over the long term and thought it important to start with a solid foundation. An Ideal Theory of Value Before examining different theories of value, it is useful to state our objectives. What do we want our foundation to do for us?
Value should bear some relationship to relative prices, or to what relative prices would be in the absence of day-to-day disturbances. The fundamental idea is to examine the forces behind relative prices in a causal sense; it is not as important to analyze them quantitatively.
A theory of value should identify the factors that determine the distribution of income. If it cannot identify the magnitude of profit, a theory of value should indicate which forces external to the economic system determine the magnitude of profit.
A theory of value should help us identify the forces responsible for economic growth.
All theories must start with a set of simplifying assumptions. We must take care to not assume away the problem we are studying. Furthermore, the structure of our model economy should identify the factors that are truly part of the economic system itself endogenous factors and the factors that affect the economy but are not themselves caused by fundamentally economic forces exogenous factors.
The relationships among the stylized facts should reveal the structure of our stylized economy without resorting to obscure mathematical formulations.
The simplified model economy which we create from our stylized facts should be highly transparent. We would like to be able to explain and present the model in a manner which allows for easy visualization. The theory should allow us to relax the less realistic assumptions.Oxford University Press recently released another entry into their series of Oxford Handbooks, this time the topic is value theory.
Like most of their handbooks, The Oxford Handbook of Value Theory is designed to be a mid- to upper-level reference volume and not an introduction, at least not an introduction to someone without some background in philosophy.
Value Theory The concept of value is a fundamental economic category, the subject of which is extremely difficult to understand and analyze. Classical economists, such as Adam Smith and David Ricardo, separately considered the exchange value (the ability of goods to exchange for others) and use value (utility, the ability of the product to.
One of the key concepts of game theory is added value. Here is the definition: Added value equals total value created with you in the game, minus total value created without you in the game.
Game theory says that if competition is unfettered, no player will get more than his or her added value in a game.
Thus, added value allows us to. Value theory is a range of approaches to understanding how, why, and to what degree persons value things; whether the object or subject of valuing is a person, idea, object, or anything else. This investigation began in ancient philosophy, where it is called axiology or ethics.
Find helpful customer reviews and review ratings for Value at Risk: Theory and Practice at attheheels.com Read honest and unbiased product reviews from our users. We judge values of things we buy. Because of perceived value oftentimes we offer more or less than the actual value of the product.
Sometimes we ready ourselves to pay a $ bill only to be surprised to see that the product's actual cost is $