Is price and value interchangable? - Page 6 - Politics Forum.org | PoFo

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#14948067
Saeko wrote:Like I said, it's a move in a chess games. And like all good moves in chess, price is a number that creates a threat.


This is too vague and thus a meaningless statement. I need something much more tangible than that. Explain the game, explain the move. I'd like some more explanation on this. What kind of threat does pricing something create?


Edit:
Further more, how does all this relate to the value of things?
#14948082
Rancid wrote:This is too vague and thus a meaningless statement. I need something much more tangible than that. Explain the game, explain the move. I'd like some more explanation on this. What kind of threat does pricing something create?


Edit:
Further more, how does all this relate to the value of things?


Well whatever you're buying you'd rather get it for $0.00 than for any other amount. But then the seller sticks a price on it, and now you have to give something up to get what you want.
#14948084
Saeko wrote:Well whatever you're buying you'd rather get it for $0.00 than for any other amount. But then the seller sticks a price on it, and now you have to give something up to get what you want.


Ok, so that non-zero price that's stuck on the item. Is that a value?
#14948104
Rancid wrote:Ok, so what is price then?


Price is merely the rate the seller is willing to trade their goods for, usually in the solution of currency. It is actually only a number. Whether they sell at that rate depends on the buyer accepting that rate also. But it's value is subjective to the importance of the item to the individual. Your example of water-diamond paradox is a perfect example of value depending on necessity and its price depending on supply.

You have yet to explain why you think supply and demand are equal for price yet you ask for an explanation yourself. Perhaps you would like to weight in this time.
#14948108
B0ycey wrote:
Price is merely the rate the seller is willing to trade their goods for, usually in a tangible solution of currency. It is actually only a number. Whether they sell at that rate depends on the buyer accepting that rate also. But it's value is subjective to the importance of the item to this individual. Your example of water-diamond paradox is a perfect example of value depending on necessity and its price depending on supply.


The part I need you to help me with is why/how price is or isn't a decent/reasonable approximation of the value of something?


B0ycey wrote:You have yet to explain why you think supply and demand are equal for price yet you ask for an explanation yourself. Perhaps you would like to weight in this time.


This part of the discussion doesn't interest me. Supply and demand are like space and time. The importance of one over the other is context dependent. If you don't agree with that, I don't give a shit, and don't care to argue it. Unless it's somehow important to the question of price versus value.

Though I suspect various ideas/subjects are just getting confounded. I feel like there's two different discussions going on here. The first being the difference between price and value, and the second being what governs price. Maybe we can extend this to a third question and say what governs value. What I care to understand at the moment is the first one.
#14948112
Rancid wrote:The part I need you to help me with is why/how price is or isn't a decent/reasonable approximation of the value of something?


By the supply avaliable of it to the consumer. The consumer wants the item at the lowest price regardless of the value it is to him. The seller wants the biggest profit he can get from it. The size of the profit depends on the competition he has. If the item is abundant he will have more competition and as such a lower profit margin.
#14948114
B0ycey wrote:By the supply avaliable of it to the consumer. The consumer wants the item at the lowest price regardless of the value it is to him.


Ok that's good. Then couldn't we say that value to the consumer is the maximum price they are willing to pay for the item? If that were the case, then yes, price will not always equal value. However, you could say that value equals a max theoretical/practical price of sorts.

B0ycey wrote:The seller wants the biggest profit he can get from it. The size of the profit depends on the competition he has. If the item is abundant he will have more competition and as such a lower profit margin.


But what does this say about the value of the item to the seller though?
#14948116
Perhaps the value of the item to the seller is basically the lowest profit (or smallest loss even) they are willing to accept. If that smallest profit yields a price that is not below the buyers max (buyers value) then there's no agreement.

Perhaps value just represent maxes and mins of price to the buyer and seller. If those can intersect, a trade can happen.

So yea, I'm convinced enough to say that price and value are not interchangeable. However, prices people are willing to buy or sell an item at (that is max and mins of buyer and seller respectively) are a kind of watermark from which we could derive a value from.

Thus, if buyer's max price equals seller's min price, then price does in fact equal value. In fact, this is the only condition where price equal value. This situation is likely rare but nonetheless, it's possible. Value just represents a minimum condition for a trade to happen.
Last edited by Rancid on 22 Sep 2018 05:50, edited 3 times in total.
#14948117
Sooo, maybe this just means that the definition of value is really the minimum pricing conditions that needs to occur for a trade to execute.

If we look at @Godstud's example about the value of a friendship. We could basically price his friendship at infinity dollars (meaning, the value of the friendship exceeds any practical amount of money). This basically declares that there is no pricing condition that could trigger Godstud to sellout his dear friend.
#14948118
Rancid wrote:Ok that's good. Then couldn't we say that value to the consumer is the maximum price they are willing to pay for the item? If that were the case, then yes, price will not always equal value. However, you could say that value equals a max theoretical/practical price of sorts.


Not really. If there is immediate neccesity the price could be infinity high. Only the supply reduces it to a price to an affordable level. So value could be any price regardless of importance.

But what does this say about the value of the item to the seller though?


The value of the item to the seller is the profit margin. That relies on demand rather supply actually. The greater the demand the lower the profit margin needs to be.
#14948119
B0ycey wrote:If there is immediate neccesity the price could be infinity high.


This is only true if the seller deems the item infinitely necessary to themselves (meaning the minimum profit they are willing accept is crazy high, or the item is as important as Godstud's friendship). At which point, the item is never up for sale anyway.

B0ycey wrote:Only the supply reduces it to a price to an affordable level. So value could be any price regardless of importance.

It's not just supply that can bring down price. What if the item needs to unloaded because it's just taking up space? I could have the only bottle of soda in the world. Sure, I could price it at a million dollars, but what if I simply don't want it on my shelve anymore? Couldn't I bring it down to a price that at least SOMEONE is willing to pay? What if the item has an expiration date too? Surely that will affect it's value over time too.

I don't believe supply is the only lever that can affect price. I need more to be convinced of that.

B0ycey wrote:The value of the item to the seller is the profit margin. That relies on demand rather supply actually. The greater the demand the lower the profit margin needs to be.


This statement doesn't make sense to me. It sounds backwards.

Who's demand? If there's a lot of demand for a product, profit margins can go up not down. IF there's a lot of demand, you could charge more (because people really want the item) which means more profit.

I would also say that the value of the item is not the profit margin. The profit margin is just the parameter the seller wants to maximize. The value will be the minimum profit they are willing to accept plus whatever the seller bought the item at.

This sort of leads into my thoughts into the idea that supply and demand are like space and time. You can't really pull them apart. They are coupled. You change one, and then you affect the other. Prices just get pushed and pulled between the interplay of supply and demand.
Last edited by Rancid on 22 Sep 2018 06:15, edited 1 time in total.
#14948120
Rancid wrote:This is only true if the seller deems the item infinitely high (meaning they want a crazy high profit, or the item is as important as Godstud's friendship).


To the seller he wants the maximum price he can get. But a transaction is a two party system. He also needs to consider the buyer and what he is prepared to pay. So he can charge what he likes. It doesn't mean sales though.

This statement doesn't make sense to me.

Who's demand? If there's a lot of demand for a product, profit margins can go up not down. IF there's a lot of demand, you could possibly charge more which means more profit.


Look at your own example. High supply and high demand equals low price - water. Low supply and low demand equals high price - diamonds.

A high supply creates competition and as such a lower price. But a high demand allows the profit margin to be low for the seller.

What the seller really wants to sell is something that is low in supply and high in demand - like land.
#14948123
B0ycey wrote:Look at your own example. High supply and high demand equals low price - water. Low supply and low demand equals high price - diamonds.

I don't think you understand the example. Water is not always in high demand. With water, there's a marginal utility. This means that each additional unit the buyer can buy, the less he's cares about it, and thus, the less he's willing to pay for it. Thus, it's not always in high demand.

I think this is where you are going to confound things and say that water is in high demand by society. In reality, society is much more concerned about preserving and growing the supply of water, because eventually, if water supplies drop, then there will only be enough water to satisfy the survival need, which then will cause water prices to go up. As long as there's enough water to satisfy the first few units of need, water will stay cheap.

B0ycey wrote:A high supply creates competition and as such a lower price. But a high demand allows the profit margin to be low for the seller.

Yes again.

B0ycey wrote:What the seller really wants to sell is something that is low in supply and high in demand - like land.

Yes again.
Last edited by Rancid on 22 Sep 2018 06:31, edited 1 time in total.
#14948124
Rancid wrote:I don't think you understand the example. Water is not always in high demand. With water, there's a marginal utility. This means that each additional unit the buyer can buy, the less he's cares about it, and thus, the less he's willing to pay for it. Thus, it's not always in high demand.


Water is always in high demand. Whether you demand it now is irrelevant. You are not society. When you don't demand water, someone else will.
#14948125
B0ycey wrote:I think this is where you are going to confound things and say that water is in high demand by society. In reality, society is much more concerned about preserving and growing the supply of water, because eventually, if water supplies drop, then there will only be enough water to satisfy the survival need, which then will cause water prices to go up. As long as there's enough water to satisfy the first few units of need, water will stay cheap.


No, it is not always in high demand. This is your fundamental misunderstanding.

I'll repost what I posted above cause you might have missed it.
I think this is where you are going to confound things and say that water is in high demand by society. In reality, society is much more concerned about preserving and growing the supply of water, because eventually, if water supplies drop, then there will only be enough water to satisfy the survival need, which then will cause water prices to go up. As long as there's enough water to satisfy the first few units of need, water will stay cheap. Water also has the benefit that it's a commodity, so that helps keep it cheap too (for now).


I encourage you to read about marginal utility some more. There are a lot of good examples that arne't just water.
Last edited by Rancid on 22 Sep 2018 06:36, edited 1 time in total.
#14948126
Rancid wrote:I think this is where you are going to confound things and say that water is in high demand by society. In reality, society is much more concerned about preserving and growing the supply of water, because eventually, if water supplies drop, then there will only be enough water to satisfy the survival need, which then will cause water prices to go up. As long as there's enough water to satisfy the first few units of need, water will stay cheap.


Your additional statement just confirms what I have been saying to you all the time. Supply dictates price. Thanks.

I know full well about marginal utility thanks.
Last edited by B0ycey on 22 Sep 2018 06:37, edited 1 time in total.
#14948127
B0ycey wrote:Your additional statement just confirms what I have been saying to you all the time. Supply dictates price. Thanks.


But so does demand. It's just like space-time man. It's just like space-time.

Fundamentally the law of supply and demand basically says, the two are coupled. It's two sides of the same coin.
#14948128
Rancid wrote:But so does demand. It's just like space-time man. It's just like space-time.


I have never said it doesn't. If demand doesn't matter it would be "Supply" not "Supply and Demand". But price is more dictated by supply rather than demand. If they are equal factors explain why both water and diamonds are not roughly the same price. Something I have asked three times now.
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