Which term is used to describe economic value?

• A. Market value
• B. Market price
• C. Market cost
• D. Demand

Answer: (A)

Economic value is captured by market value. Market value is the estimated worth of an asset or service in an open, competitive market, reflecting what knowledgeable buyers are willing to pay and what knowledgeable sellers are willing to accept under normal conditions. It embodies the economic benefits and risks tied to owning or using the item, including scarcity and potential future cash flows. The actual price paid in a transaction is market price, which can differ from market value due to negotiation, timing, or unique deal terms. Market cost isn’t a standard term in this context, and demand refers to how much buyers want at various prices rather than the intrinsic value of the asset itself.