Dunban67 said:
sc94597 said:
Dunban67 said:
sc94597 said:
Again market value =/= market price. Market price is the minimum at which people can buy a good (in your scenario the market price of the XBO is $200.) Market value is the maximum at which a person/group of people will buy a good. Market value is different for different people. There is an average market value, which you are alluding to, but that can only be determined through an open-market auction and it is very much price AND time dependent.
YOU MUST provide context when you say "more valuable."
In your scenario I value an XBO at $200 or anything less than $350 - (the perceived cost of sale.) That is the most I will pay for it. On the otherhand my willingness to pay for the Wii U can exceed this value, and therefore I value the Wii U more than the XBO, even if I choose the XBO to fund my purchase of the Wii U. An alternative scenario is if you have $350 and you want an XBO (the market price of the XBO is $350.) You find a Wii U for $200 and sell it for $300 to help fund your XBO and also gain some extra money. In the end you make $100 on top of your $350 and buy your XBO + a game. Just because you chose to buy a Wii U before buying an XBO does not mean you value the Wii U more than the XBO. You valued the XBO AT LEAST at $350 and the Wii U at most at $300 ($200 you paid + $100 profit you make from it.)
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What YOU (or I) value a product at means nothing to anyone - Virtually no one will knowingly/willingly pay more than the market price of a readily available product - Your willingness to pay more for a Wii U than an Xbox One is a definition of nothing but your preference- it has nothing to do with value unless a critical mass within a market felt the same way- which is not the case
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I noticed that you didn't address my scenario. In that scenario does the Wii U have more value than the XBO because any person will buy it before an XBO?
Value is exactly prefence. Just because the marginal value of the XBO is greater in your scenario does not mean its total value is greater.
And yes, people do pay more or less than market price in many real-world situations.
"In economics, market price is the economic price for which a good or service is offered 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."
^ Is not always true.
http://www.parjustlisted.com/what%E2%80%99s-the-difference-between-price-and-value/
The debate over “prices” and “values” is a very old and famous one in economics, perhaps 250 years in the making. In the short run, it is quite possible to find prices higher or lower than values due to unusual events or rapid changes in market conditions. In the long run, price equals value due to market forces.
We make decisions in the short run. Therefore, it is possible that prices will exceed values (this is typically called “over-valuation”) or prices may be less than values (this is called “under-valuation”). If there were no differences between value and price, under- and over-valuation would have no meaning.
Researchers and analysts study markets in attempting to identify situations where there is over- or under-valuations. We can observe prices (as reported by MLS offices from actual transactions) but we cannot observe values. The latter must be estimated in careful studies by statistical analysis.
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Still an "A" for effort- but your aim is getting worse- You are talking about "inneficient markets" and the definitions you are using are typically applied to investments like Real Estate, stocks and bonds- The value of investments rise and fall over time- The value of a current/recent gen video game console, like virtually all modern technology will always drop over time (unless it becomes some rare colllectable 30 years from now)
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Video game consoles (and games) frequently have supply issues. In these instances the value and market price rises. And the video game console market isn't a perfectly competitive or even realistically competitive one either, it is most oftenly characterized as an oligopoly, so it very well may be an inefficient market. Nevertheless, I would say the value of video game consoles increases, peaks, and then decreases with time. More often than not demand increases with time for video-game consoles, until they peak (incline caused by game releases and then a decline by market saturation.) This is true even when the price changes are miniscule, if existent at all. This also shows how demand (proportional to value) and price are asynchronous in the video game console market. The manufacturers, because of thier oligopoly, aren't price-takers (like, say, farming) and are able to manipulate prices more easily. This is why we don't see console prices change very much with changes in demand. Usually if a console price is changed it is because of reduced costs of production and an endeavor to expand consumer-bases.
