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People are willing to pay up to the perceived value for themselves. That's how an equilibrium price is determined. If I can make $10/hour running a generator,
by adam_arthur 4y ago
People are willing to pay up to the perceived value for themselves. That's how an equilibrium price is determined.
If I can make $10/hour running a generator, then I'm willing to pay up to $10 in fuel to operate it
- datadata 4y agoI think that's just an extra step in your argument about intrinsic value. Now you have to analyze why the price of energy is $10/hour. That transaction is just another thing determined by a market where there isn't actually intrinsic value that sets the price, but another buyer. You can analyze this series of transactions forever, but you won't ever arrive at a point where the intrinsic value of something is what sets a price directly. Note: I completely agree with you on the concept of an equilibrium price being a real thing, I just don't think equilibrium is determined by intrinsic value.
- adam_arthur 4y agoThe buyers and sellers reach an equilibrium price, determined by a market, yet justified by the intrinsic value of what you're purchasing.