Real Value
Real value is a concept used in economics and finance to describe the actual worth of an asset or service. It is the difference between the market value of an asset or service and the cost of producing it. Real value is also known as intrinsic value or fundamental value. It is the value of an asset or service that is not affected by market forces, such as inflation or speculation. Real value is often used to compare the worth of different investments or services.
History of Real Value
The concept of real value has been around since the early days of economics. The idea of intrinsic value was first introduced by the philosopher Aristotle in the 4th century BC. He argued that the value of an item should be based on its usefulness or utility, rather than its cost. This idea was later developed by the economist Adam Smith in the 18th century. Smith argued that the real value of an item should be based on the labor and resources required to produce it.
In the 19th century, the economist John Stuart Mill further developed the concept of real value. He argued that the real value of an item should be based on its usefulness to society, rather than its cost. This idea was later adopted by the economist Alfred Marshall in the early 20th century. Marshall argued that the real value of an item should be based on its ability to satisfy human wants and needs.
Comparison Table
| Term | Definition |
|---|---|
| Market Value | The price of an asset or service in the market. |
| Cost of Production | The cost of producing an asset or service. |
| Real Value | The difference between the market value and the cost of production. |
| Intrinsic Value | The actual worth of an asset or service. |
| Fundamental Value | The value of an asset or service that is not affected by market forces. |
Summary
Real value is a concept used in economics and finance to describe the actual worth of an asset or service. It is the difference between the market value of an asset or service and the cost of producing it. Real value is also known as intrinsic value or fundamental value. It is the value of an asset or service that is not affected by market forces, such as inflation or speculation. For more information about real value, you can visit websites such as Investopedia, The Balance, and Investing.com.
See Also
- Market Value
- Cost of Production
- Intrinsic Value
- Fundamental Value
- Inflation
- Speculation
- Utility
- Labor
- Resources
- Human Wants and Needs
