Value

simple:Value

In economics, the value of an object or service is the price it would bring in a fair, open market; the item's "buying power".

In marketing, the value of a product is the consumer's expectations of product quality in relation to the actual amount paid for it. It is often expressed as the equation:

Value = Quality received / Price

or alternatively:

Value = Quality received / Expectations

Intrinsic value is value which is inherent in an object: A one-ounce gold coin has intrinsic value because of the gold it contains. Even if its issuing authority (such as a government) were to fail to honor the coin's value, it would retain its intrinsic value.

Extrinsic value is value which arises because of an agreement: Although the intrinsic value of a €100 note is not much more than the value of any similar piece of paper with a pretty picture on it, it has a practical value (an extrinsic value) of €100. If its issuing authority were to fail to honor the note's value, it would soon become nearly worthless. This happened recently with the Argentinian peso.

However the lack of support from an issuing authority does not guarantee the collapse in value of such paper currency. A recent example from Iraq illustrates the point. Following the American invasion of 2003 the government of Saddam Hussain was deposed. The Iraqi Dinar was without the support of an issuing authority and the Americans specifically and publically stated that they would not guarantee the value of the Iraqi Dinar. However despite this fact the Iraqi Dinar rapidly appreciated in international markets and nearly double in value in less than a week, despite being an historically soft currency. Scarcity is frequently a sufficient quality to ensure continued market or even improved market value.

See also: Anthropological theories of value for a more general discussion of economic value.