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Market price
From Wikipedia, the free encyclopedia
Market price is an economic concept with commonplace familiarity; it is the price that a good or service is offered at, or will fetch, in the marketplace; it is of interest mainly in the study of microeconomics. Market value is the total market price of a given quantity of a good. In the case of a company, the total market value of the company's shares is its market capitalization.
Market price is one of a number of ways of establishing the monetary value of a transaction; there are others, such as historical cost; the resource cost of the good or service; the discounted present value, economic value, intrinsic value, and others.
Many second order factors bear on market price in practice, not least the availability of market information to suppliers and potential purchasers.
In classical economics, the market price of a good or service is established in relation with demand, and in inverse relation with supply, which is to say the market price decreases as supply increases; increases as supply decreases; increases as demand increases; and decreases as demand decreases. The actual market price will establish a particular price point, valid for a short period which is the meshing of current demand and supply.