What is Market Value definition/concept
The term market value refers to the price that the marketplaces on a particular good or service . This value is the only one that can be taken into account, as it freely determines the strength of the society represented under supply and demand. When, due to some opportune situations, one tries to manipulate this type of value, unpleasant situations may happen, such as shortages.
On some occasions it is important to know a previous estimated value for interacting in the market. In these cases, what is established is a rate that predicts the market value, but in no way can be considered as a substitute; this situation is typical of some valuation strategies to be used in the capital market or for the real estate market.
The interaction between supply and demand to determine the market value of a good or service can be easily identified on Cartesian axes. Thus, it can be projected on two curves, one representing the supply and the other the demand; on the other hand, the axes measure price and quantity. It is noticed that as the price increases, the supply increases, whereas when the opposite happens, the supply decreases and the demand increases. From the point where supply and demand meet, the price or market value is determined.
As mentioned earlier, governments try to manipulate this situation. Thus, they assign a maximum value to the product in question. This type of action is typical of inflationary contexts where there is an excessive issuance of money to mask the situation of some trade variables . Thus, if the price is low, there will simply be little supply of these goods on the market, creating a paradoxical situation, because when there is little supply of a good, prices increase. The problem can be observed only through the creation of a parallel market that can function correctly and get rid of these types of regulations.
Lastly, it is extremely difficult to say and for some almost impossible to predict the market value of a product in the future. There are numerous analysis formulas that try to provide an explanation, but they always have limitations, making the investment area a circle limited to specialists.