eli5 How is the economic value of an item determined if different sellers sell it at different prices?

Question

eli5 How is the economic value of an item determined if different sellers sell it at different prices?

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Answer 1

The simplest way to put it is that the economic value of an item is whatever price a seller and a buyer agree to (with the assumption both are acting in “rational self interest”). This may change over time or even just between people.

In economics, there is no fixed value of a good or service, just what people are currently willing to pay.

In day-to-day, we will generally take a look at what a bunch of buyers and sellers all over are willing to pay/sell for, and state that the “value” is somewhere in that range.