Question

what is value ? and What is price ? what is the difference between both of them? explain your answer with an example

Answer 1

Price: is what you pay when you purchase a good or avail a service. This will be charged by the person selling the good or providing the service. It will be mostly the same for every person

Value: is what the good or service pays you or the amount that you are willing to pay based on the estimated benefit that you get out of the good or service. Value varies from person to person based on the benefit they can fetch out

lets take an example of a purchase of BMW car by person A and B

Person A, wanted to show the car as his status symbol in the society and so ready to pay anything for it. So, buying a BMW car is associated with higher value for Person A

Person B, wanted a car just for travelling purpose and so he has so many options to buy a car. So, buying a BMW is not necessary for person B and so adds little value.

So, here the value differed based on their needs where price will be same for both of them