Economic values are defined as variables that establish a relationship of importance. That is, depending on the economic perspective with which it is analyzed, an appreciation or criticism can be made.
In this way it is evaluated whether a person, product, service or commercial activity; it has a value determined by different factors.
What are economic values?
Economic values are related to the price or value of goods and services. These are valued according to different factors. Their usefulness lies in the fact that they allow more precise choices to be made. They are measurements that are based on different factors of which people are aware.
Many times, the “price” or “economic valuation” of something depends on external factors. Some that we can mention:
- Personal needs,
- Social pressure,
- The income that allows the acquisition of these goods.
Factors that affect economic values
Various aspects influence the economic valuation. Mainly, the costs associated with the products are taken into account . These are related to the expenses required to be able to manufacture or distribute them in the market.
- The labor is a primary consideration. It should not be forgotten that the production of a product depends entirely on the intervention of specialists capable of producing.
- Another determining factor is transportation . Why? Well, any means used that allows a product to reach a potential customer varies considerably the initial price.
- We must not forget the raw material , that is, all the inputs that were used to complete the manufacture.
- Other activities that increase the capital gain of the product are also taken into account . Sometimes you have to carry out some extra tests and actions that considerably increase the initial value.
Finally, you have to consider quality and reputation . An object of better material, with fine workmanship and aesthetics, is worth much more. Also, it depends on the brand. For example, a Ferrari brand car is worth more than others.
Characteristics of economic values
Economic values are related to social status , aesthetic appeal, emotional impact and also ultimately to quality .
These are all concepts that can be applied in finance and business activities. Even; Concepts such as fidelity and convenience apply .
An economic value can refer to a monetary amount that a person is willing to pay in exchange for a good or a service . But, also on some occasions, economic values will be dictated by historical, social and emotional reasons .
Sometimes, it happens that the worth of a product depends on the competition to obtain a certain object or product. A good example of this can be found in auction houses that sell antiques.
Types of economic values
The economic valuation of the products is done by having references that are reliable, easy to understand, fast and flexible . Some that we can mention are those indicated below:
This is a value that refers to a minimum economic amount . This is the initial value with which the sale of a product or service is offered in the market.
It is estimated that the production costs add up to a certain amount of money, which must be recovered when the product is marketed.
There are cases in which people will not be willing to pay an amount that is equal to or exceeds the initial sale price. This means that such assets depend on a sales plan to ensure that their value can be maintained in a different market segment.
The various economic variables establish different perspectives that give each product a maximum value. According to the conclusions dictated by a study of the market and consumers, it is possible to understand in a better way what is the price they are willing to pay.
The supply demand relationship
According to different scenarios, its impact on the value has repercussions in several ways. If the product is well positioned in the market, there will be an increase in demand for it .
However, this triggers a lower supply. Consequently, there will be an increase in price . It is worth saying that people will also be willing to pay this increase in order to obtain a highly valued product.
On the other hand, there is little demand and a high supply; automatically the value of the product decreases . This happens since there are no people interested in acquiring it.
The key is to maintain a balance between demand and supply . This is how the economic value of a product will be determined by these factors.
This is a referent that is used to establish what the minimum value is . To do this, certain unique characteristics of the product are taken into consideration; or that is being offered.
This is an indicator that will influence the perspective and paradigm of each client.
It is the evaluation that allows us to understand if a certain investment is going to allow a project to be fully developed. In this way, you can know if it is possible to recover the money that has been invested . This is done by estimating the cost of production.
It is necessary that the cost value is less than the economic value of the income due to the positioning of the product in the market .
All projects must consider production costs. Also, consider what it costs to distribute them to the consuming public. In the end, the price paid must be profitable for whoever offers the product.
Rate of return
This is an evaluation that is made through calculations made on the estimated projections of the expected remuneration . This is a profitability variable that allows you to evaluate whether a project is successful … or not.
Gross domestic product (GDP)
This is the sum of all the values assigned to each of the markets in which it has been decided to bid .
Each of the conditions that influence the economic variation of the product is evaluated. Also, it is an indicator that is used to analyze the conditions in which the product is offered.
The above has a very clear example: the same product has a different price in several countries. Why? Because they are nations with economies with different ranges of GDP.
Added economic value
This is an indicator that is used to evaluate the wealth that a service or product is generating .
To make this calculation, factors that represent a risk are taken into consideration .
To determine this , tax planning is carried out , which allows a more precise analysis of the assets. The purpose is to reduce your burden. Those assets that maintain a constant relationship between sales and the expenses they generate are selected.
It will be related to the law of the claim . It happens that this surplus occurs when there is a smaller quantity of a product, which causes that product to become more expensive.
Its value will change not only because of the quality of the product, it also increases because of its popularity with the public . The price is maintained, but the willingness of people to try to get it causes its price to increase.
This is a dynamic value , it does not remain constant. Also, it can happen when a substitute is found for the same product; or also a complement.
With the above, the value of the product decreases considerably. Such alterations indicate that the needs of customers have changed and they have decided to opt for the competition .
Importance of economic values
These values are important as they function as a guide to help build and develop profitable economic systems .
Its use allows for conscious evaluations of economic systems and markets. This is done in a specialized way, since indicators that are accurate are used .
Also, they serve as criteria to make an analysis of what are the most favorable conditions to position a product . They also indicate how to offer a service in the market and make it profitable .
Applying these values helps increase the possibility of profitability of an investment . A good part of world economic policies use these values in decision-making.
All the countries of the world maintain an economic system that allows benefits to be granted to the population. To do this, they take into account economic values.
Alexa Clark specializes in Cognitive Behavioral Therapy. She has experience in listening and welcoming in Individual Therapy and Couples Therapy. It meets demands such as generalized anxiety, professional, love and family conflicts, stress, depression, sexual dysfunction, grief, and adolescents from 15 years of age. Over the years, She felt the need to conduct the psychotherapy sessions with subtlety since She understands that the psychologist acts as a facilitator of self-understanding and self-acceptance, valuing each person's respect, uniqueness, and acceptance.