Question value is necessary a subjective concept, something that dwells in the minds of people, influenced by their own perception of what constitutes value, the law, the economy the valuer.
Value being subjective to the perception of a person is a rather multidimensional idea. The idea of subjective value is one argued upon buy economists all over and usually compared and contrasted with other theories of value e.g. the labour theory of value.
The subjective theory of value has some feet on the debate and has its supportive arguments. Subjective value is a crucial term used by microeconomic and financial theories of decision making. Decisions occur between alternatives that can be certain or uncertain. Uncertain options are risky when the probabilities of outcomes are known. They are unambiguous when probabilities are not completely unknown.
Factors affecting influencing the subjective value of a risky option are its expected outcome value and its risk. Subjective value however increases with the expected outcome.
The expected satisfaction of ones needs (utility) provides another description for subjective values. These theories assumes that choice provides all the necessary information about subjective value choice dependant decision utility has supersided experienced utility, which does not necessarily require choice.
It cannot be ruled out that utility indicated in the absence of choice might serve as input for decision utility.
Economic action is always in accord only with the importance that a person attaches to limited quantities among which he she must choose.
The subjective theory of value holds that for a thing to posses value, it must be useful and scarce. Value is dependent on the ability of an object to satisfy the wants of a person.
The theory recognizes that one thing may be useful to one person and less useful to another hence varying in value according to each person.
The theory clearly states two conditions which must be present for a thing to become valuable. They are
The things must satisfy human wants and therefore there is demand for them.
The things must be limited in supply.
This is because of there is a big supply for them, not many people will have the urge to buy them hence demand will be low because many people have the thing e.g. selling corn in a corn producing region will lead to decreased value of corn subjective theory holds the fact that all trade must be voluntary which makes it mutually beneficial in that any individual purchases a thing because he she values it. In trading both parties must feel that they are getting more value than they are transferring to each other.
Subjective theory leads to the accumulation of wealth in he context where the wealth is measured by owners valuation of his her assets.
Value of a thing is also affected by where somebody perceives of what is law. The terms under which ownership of the thing commodity is being transferred greatly affects its value. For example
If delivery is provided for the thing. A thing which is being delivered to the buyers location or residence is more valuable than a thing which the purchaser is making arrangements to deliver.
A seller may also value his her thing more if he she is selling the thing on credit or hire purchase. Delayed payments make the seller value his commodity since he she will have to wait for the full payment of his her thing. That is the reason why many of the things bought on hire purchase are often more expensive than if they were bought on cash.
The value of a thing is also greatly influenced by the valuer. An athlete for example may value his her running gear so much so as to sell it at an exorbitant amount in comparison to what the gear may go for normally. This is because the athlete may have special connection to the gear. It may be that he she has won great events in that gear. The personal connection to a thing greatly affects the value of the thing.
A thing going to the auction of things belonging to a popular musician will not go there with a few cents in his her person. This is because according to the musicians social class, the person would not expect to chuck out a few climes in exchange for the musicians first guitar.
In generally the value of a thing gains its exchange value from the customers subjective valuations of the good. The customers opinion of the commoditys value greatly affects its value. The reason as to why a person may prefer buying one brand of a toothpastes compared top another greatly affects the value of toothpaste.
The reason as to why a person may prefer to buy a doughnut instead of a bun is highly subjective to the persons perception of the doughnut or bun.
If many people think like the person, it will result to an increased value of the doughnut as compared to the bun, no matter the ingredients being used to make both..
Value being subjective to the perception of a person is a rather multidimensional idea. The idea of subjective value is one argued upon buy economists all over and usually compared and contrasted with other theories of value e.g. the labour theory of value.
The subjective theory of value has some feet on the debate and has its supportive arguments. Subjective value is a crucial term used by microeconomic and financial theories of decision making. Decisions occur between alternatives that can be certain or uncertain. Uncertain options are risky when the probabilities of outcomes are known. They are unambiguous when probabilities are not completely unknown.
Factors affecting influencing the subjective value of a risky option are its expected outcome value and its risk. Subjective value however increases with the expected outcome.
The expected satisfaction of ones needs (utility) provides another description for subjective values. These theories assumes that choice provides all the necessary information about subjective value choice dependant decision utility has supersided experienced utility, which does not necessarily require choice.
It cannot be ruled out that utility indicated in the absence of choice might serve as input for decision utility.
Economic action is always in accord only with the importance that a person attaches to limited quantities among which he she must choose.
The subjective theory of value holds that for a thing to posses value, it must be useful and scarce. Value is dependent on the ability of an object to satisfy the wants of a person.
The theory recognizes that one thing may be useful to one person and less useful to another hence varying in value according to each person.
The theory clearly states two conditions which must be present for a thing to become valuable. They are
The things must satisfy human wants and therefore there is demand for them.
The things must be limited in supply.
This is because of there is a big supply for them, not many people will have the urge to buy them hence demand will be low because many people have the thing e.g. selling corn in a corn producing region will lead to decreased value of corn subjective theory holds the fact that all trade must be voluntary which makes it mutually beneficial in that any individual purchases a thing because he she values it. In trading both parties must feel that they are getting more value than they are transferring to each other.
Subjective theory leads to the accumulation of wealth in he context where the wealth is measured by owners valuation of his her assets.
Value of a thing is also affected by where somebody perceives of what is law. The terms under which ownership of the thing commodity is being transferred greatly affects its value. For example
If delivery is provided for the thing. A thing which is being delivered to the buyers location or residence is more valuable than a thing which the purchaser is making arrangements to deliver.
A seller may also value his her thing more if he she is selling the thing on credit or hire purchase. Delayed payments make the seller value his commodity since he she will have to wait for the full payment of his her thing. That is the reason why many of the things bought on hire purchase are often more expensive than if they were bought on cash.
The value of a thing is also greatly influenced by the valuer. An athlete for example may value his her running gear so much so as to sell it at an exorbitant amount in comparison to what the gear may go for normally. This is because the athlete may have special connection to the gear. It may be that he she has won great events in that gear. The personal connection to a thing greatly affects the value of the thing.
A thing going to the auction of things belonging to a popular musician will not go there with a few cents in his her person. This is because according to the musicians social class, the person would not expect to chuck out a few climes in exchange for the musicians first guitar.
In generally the value of a thing gains its exchange value from the customers subjective valuations of the good. The customers opinion of the commoditys value greatly affects its value. The reason as to why a person may prefer buying one brand of a toothpastes compared top another greatly affects the value of toothpaste.
The reason as to why a person may prefer to buy a doughnut instead of a bun is highly subjective to the persons perception of the doughnut or bun.
If many people think like the person, it will result to an increased value of the doughnut as compared to the bun, no matter the ingredients being used to make both..
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