subjective value theory (economics)
Created: 2022-12-27
Status: #soil
Last Edited: 2022-12-27
Topic: economics
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Subjective value theory is an economic theory that holds that the value of a good or service is determined by the subjective preferences of the individual consumers or producers.
It states that the value of a good or service is not based on its intrinsic worth, but rather on its perceived worth to the individual.
The theory was developed by economists such as Carl Menger, Alfred Marshall, and Vilfredo Pareto. Subjective value theory has been influential in the development of Neoclassical Economics and Behavioral Economics.
How is it used in business today?
Subjective value theory is used by businesses to determine the prices of goods and services they offer. Businesses use the subjective preferences of their customers to determine how much they should charge for a product or service.
How is it used in politics?
Subjective value theory is used by politicians to understand what their constituents value most. Politicians use this information to develop policies that reflect the values of their constituents and to determine the prices of goods and services provided by the government.