Market price

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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.

On restaurant menus, "market price" (often abbreviated to m.p. or mp) is written instead of a price to mean "price of dish depends on market price of ingredients, and price is available upon request", and is particularly used for seafood, notably lobsters and oysters.

Measure of value

In classical economics, market pricing is primarily determined by the interaction of supply and demand. Price is interrelated with both of these measures of value. The relationship between price and supply is generally negative, meaning that the higher the price climbs, the lower amount of the supply is demanded. Conversely, the lower the price, the greater the supply is demanded[1]. Market price is just one of the number of ways to establish the monetary value of a good or a transaction. Shifts due to changing consumer preferences will inherently influence market price. [2]

Other measures of value include historical cost, the resource cost of the good or service[3], an appraised value (such as the discounted present value), economic value and intrinsic value.

See also

  • Equilibrium price (the market price typically equals the equilibrium price, although sometimes there may be delays as the price slowly adjusts towards the equilibrium)
  • Supply and demand

References

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