How to interpret a thing's value?

Economics Economics Questions
1

What is the best way to look at how a thing is valued -by itself in it’s own market where the supply and demand set price or by its relation in a structure of production in which case its price is its discounted marginal product?

2

I am a little confused as to what you mean by “value”, it seems (at least to me) that you are trying to use “value” and “price” interchangably.

Its value in the mind of one individual?

Are you trying to find its price in the market overall?

Its price in an individual transaction?

How costs and the structure of production effect price?

3

price and value are interconnected on the market isn’t it?

I suppose my question is using the word value as far as it applies to a “market overall”. I suppose that if the price is higher as a means than as an end, the “price-as-means” would have to be bid up or down to equilibriate the two prices -arbitrage essentially.

4

Yes, connected, but I would try to keep the two words seperate as to not get them confused with eachother. Value is more along the lines of how much utility an individual puts into a given good (and every individual VALUES every good differently), while prices arise from trade between individuals.

Perhaps you would want to start back from the basics (or not so basic if you want some more technical papers/speeches on the topic), and how prices actually arise on the market from subjective preferences. Grasping the concepts at a lower level of one, or a few individuals in a market, will help solidify the concepts and make it easier to think about.

Over the past few days I have been reading Lessons For The Young Economist, and I think Bob Murphy does an ok job of explaining the (very) basic of how prices arise from subjective preferences of individuals.

I guess the easiest way to imagine this is Supply and Demand curves for the good in its own individual markets, WHILE at the same time keeping in mind some other ideas/concepts. For example,

  • The Demand curve arises from the Preference Scales of individuals.

  • This good does not float in a vacuum, it is competing with every other good at the same time. (pretty much a restatement of the first point)

  • Marginal Cost tends towards Marginal Benefit

Here is a speech whch you might be relevant as well, “Money And Prices” by Joe Salerno:

http://mises.org/media/2085/Money-and-Prices

Other concepts you might want to look into, Preference (Value) Scales, subjective values giving rise to objective prices.