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Economic value is the maximum price or opportunity cost a person or organization is willing to pay for a product, service, experience or asset. The following are illustrative examples.
CapitalCapital is a durable good that can be used to create products and services such as the camera of a professional photographer. The value of capital is based on the revenue that the capital can generate. TalentThe capabilities and productive talents of an individual. Valued by the productive potential of an individual in a particular context. For example, a firm will value the work of an advertising executive who consistently impresses clients more than the work of an executive who consistently disappoints clients.
Brand value is the worth of a brand based on factors such as brand recognition and brand image. For example, a brand that billions of people recognize and feel good about is extremely valuable based on its potential to generate future revenue.AssetsAssets are economic resources such as land or gold. They are valued by their potential to generate future revenue or satisfy future customer needs. For example, a family that purchases a house may value a property based on its utility to the family over the 20 years.
Consumer goods are products and services purchased by individuals. The value of products and services is based on customer needs and preferences. This should not be confused with price. For example, drinking water has very high value as people can't live without it but may have a low price.
ExperiencesExperiences can have economic value to an individual. For example, a father who enjoys playing soccer with his children may be willing to pay an opportunity cost to take the day off and go to the park.Social capital is the network of social relationships held by an individual or organization at a point in time. This is valued based on the goals of the individual or organization. For example, a salesperson who personally knows most of a firm's target market might be extremely valuable to the firm.
The value of information can be based on its ability to generate revenue for an organization or individual. It can also be considered an experience good as customers may need it simply because they are curious.SafetyPeople and organizations may value risk reduction. For example, an individual who is willing to pay a far higher price for a safe flight over a dangerous one.
Tangible and intangible goods that people value as being important to their well being. For example, clean air may be incredibly valuable to an individual or community.NotesA person is willing to buy something if value is higher than price. As such, value is typically higher than price. Value isn't always bought and sold and is often free. Value usually has an opportunity cost. If you decide to jog, you may not have time to read.Value drops when a customer already has a good. If you don't have a bicycle, a bicycle may be valuable to you. If you already have a bicycle, you may have no need of a second.|
| Type | | | Definition | The maximum price or opportunity cost that a person or organization is willing to pay for a product, service, experience or asset. | | Related Concepts | |
Goods
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