What exactly is market value?
submitted by tom

smithington

Market value is the price people are willing to pay for something. Ultimately, the people who buy things determine what it's worth to them.

Market value fluctuates as supply and demand change.

elrond

It's what a buyer is willing to pay for some asset.

It's called "market" value, because it isn't just one person's opinion. It's what the item would go for on the open market For example, if you sold some old hockey equipment to a friend, you probably aren't charging full price. If you sold it on craigslist, you'd likely charge more. That price would be closer to market price.

If you think about prices at a grocery store, you can kind of see how market value works. Say bananas are super cheap this month. People will probably buy more than what they normally would, just to take advantage of the deal. In that case, they're priced below market value. If the prices go way up next month, many people will buy something else instead. That's their way of saying, "I like that, but it's not worth THAT much to me." That means the price is above market value. When you bring it down to where most of the people who want it are willing to pay for it, you're at market value.