Share on Facebook Share on Twitter Email
Answers.com

market price

 

n.
The prevailing price at which merchandise, securities, or commodities are sold.


Search unanswered questions...
Enter a question here...
Search: All sources Community Q&A Reference topics
The actual price paid in a market transaction.
Contrast with market value.


Example: A home was offered for sale at $100,000. It was appraised for $93,000, and actually sold for $95,000 in an arm ’ s length transaction. The market price is $95,000.

Previous:Market Participant Interview, Market Indicators
Next:Market Rent, Market Research


1. price at which the seller and the buyer agree to trade on the open market.


2. in transfer pricing , best transfer price (i.e., the price that will maximize the profits of the company as a whole), under the following conditions: (1) a competitive market price exists; and (2) divisions are independent of each other. If divisions are free to buy and sell outside the company, the use of market prices preserves divisional autonomy and leads divisions to act in a manner that maximizes the profits of the company as a whole.

Previous:Market Index of Stock Prices, Market Cap (market capitalization), Markdown
Next:Market Risk Premium, Market Share Variance, Market Size Variance
Barron's Law Dictionary:

market price

Top
“established by public sales or sales in the way of ordinary business,” 171 N.E. 2d 207, 213; “figure fixed by sales in ordinary business transactions, established when other property of the same kind and in the same or comparable location has been bought or sold in so many instances that such value may reasonably be inferred,” 120 A. 2d 77,
80. This price is based on a theoretical transaction between a free seller and buyer dealing at arm’s length. 367 F.
2d 104, 110. This term is synonymous with actual valuation, actual value, market value, and fair value. In determining a buyer’s damages for nondelivery or repudiation of goods, “market price is determined as of the place for tender or, in cases of rejection after arrival or revocation of acceptance, as of the place of arrival.” U.C.C. §2-713(2).

The current price at which an asset or service can be bought or sold. Economic theory contends that the market price converges at a point where the forces of supply and demand meet. Shocks to either the supply side and/or demand side can cause the market price for a good or service to be re-evaluated.

Investopedia Says:
For example, suppose that the market price for a widget has been $10 for a number of years. Suddenly, the market price shifts to $20 when it is announced that only half of this year's widgets will be sold in stores. In this case, a drop in supply causes the market price to increase.

In regard to stocks, the market price of a stock is the most recent price at which the stock was traded. It does not guarantee that an investor will receive the same price upon buying the stock afterward. For example, suppose that a company's stock has been halted from trading because it was planning to release some material news in the next hour. While the market price of the stock at the time will be the last price at which the stock traded, buying the stock when trading resumes will definitely yield a different price.

Related Links:
The P/B ratio can be an easy way to determine a company's value, but it isn't magic! Using The Price-To-Book Ratio To Evaluate Companies
Read on to learn more about the the nature of stocks and the true meaning of ownership. Why Do Companies Care About Their Stock Prices?
Learn economics principles such as the relationship of supply and demand, elasticity, utility, and more! Economics Basics
From unemployment and inflation to government policy, learn what macroeconomics measures and how it affects everyone. Explaining The World Through Macroeconomic Analysis
The answer to this question is directly related to the importance of information in the marketplace. What Is The Impact Of Research On Stock Prices?


Random House Word Menu:

categories related to 'market price'

Top
Random House Word Menu by Stephen Glazier
For a list of words related to market price, see:
  • Securities - market price: prevailing price for security or commodity in given market


Wikipedia on Answers.com:

Market price

Top

In economics, market price is the economic price for which a good or service is offered in the marketplace. It is of interest mainly in the study of microeconomics. Market value and market price are equal only under conditions of market efficiency, equilibrium, and rational expectations.

On restaurant menus, "market price" (often abbreviated to m.p. or mp) is written instead of a price to mean "price of dish depends on market price of ingredients, and price is available upon request", and is particularly used for seafood, notably lobsters and oysters.

Contents

Measure of value

In classical economics, market pricing is primarily determined by the interaction of supply and demand. Price is interrelated with both of these measures of value. The relationship between price and supply is generally negative, meaning that the higher the price climbs, the lower amount of the supply is demanded. Conversely, the lower the price, the greater the supply is demanded.[1] Market price is just the price at which goods and services are sold.

Price, the amount of goods for which a product is sold, may be seen as a financial expression of the value of the product. Setting the right price is an important part of effective marketing, being the only part of the marketing mix that generates revenue, as product, promotion, and place are all about marketing costs. Price is also the marketing variable that can be changed most quickly (e.g. to a competitor price change).

For a consumer, price is the monetary expression of the value to be enjoyed/benefits of purchasing a product, as compared with other available items.

The concept of value can therefore be expressed as:

Perceived Value = Perceived Benefits − Perceived Costs

A customer’s motivation to purchase a product comes firstly from a need (e.g. "I need to eat") and a want (e.g. "I would like to eat out tonight."). The second motivation comes from a perception of the value of a product in satisfying that need/want (e.g. "I really fancy a McDonalds").

The perception of the value of a product varies from customer to customer, because perceptions of benefits and costs vary.

Perceived benefits are often largely dependent on personal taste (e.g. spicy versus sweet, or green versus blue). In order to obtain the maximum possible value from the available market, businesses try to ‘segment’ the market – that is to divide up the market into groups of consumers whose preferences are broadly similar – and to adapt their products to attract these customers.

In general, a products perceived value may be increased in one of two ways – either by:

  1. Increasing the benefits that the product will deliver, or,
  2. Reducing the cost.

For consumers, the PRICE of a product is the most obvious indicator of cost - hence the need to get product pricing right.

Factors affecting demand

Consider the factors affecting the demand for a product that are

  1. within the control of a business and
  2. outside the control of a business:

Factors within a businesses’ control include:

  • Price (assuming an imperfect market – i.e. not perfect competition)
  • Product research and development
  • Advertising & sales promotion
  • Training and organisation of the sales force
  • Effectiveness of distribution (e.g. access to retail outlets; trained distributor agents)
  • Quality of after-sales service (e.g. which affects demand from repeat-business)

Factors outside the control of business include:

  • The price of substitute goods and services
  • The price of complementary goods and services
  • Consumers’ disposable income
  • Consumer tastes and fashions

Price is, therefore, a critically important element of the choices available to businesses in trying to attract demand for their products.

See also

References


 
 

 

Copyrights:

American Heritage Dictionary. The American Heritage® Dictionary of the English Language, Fourth Edition Copyright © 2007, 2000 by Houghton Mifflin Company. Updated in 2009. Published by Houghton Mifflin Company. All rights reserved.  Read more
Barron's Real Estate Dictionary. Dictionary of Real Estate Terms. Copyright © 2008 by Barron's Educational Series, Inc. All rights reserved.  Read more
Barron's Accounting Dictionary. Dictionary of Accounting Terms. Copyright © 2010 by Barron's Educational Series, Inc. All rights reserved.  Read more
Barron's Law Dictionary. Law Dictionary. Copyright © 2003 by Barron's Educational Series, Inc. All rights reserved.  Read more
Investopedia Financial Dictionary. Copyright ©2010, Investopedia.com - Owned and Operated by Investopedia US, A Division of ValueClick, Inc. All rights reserved.  Read more
Random House Word Menu. © 2010 Write Brothers Inc. Word Menu is a registered trademark of the Estate of Stephen Glazier. Write Brothers Inc. All rights reserved.  Read more
Wikipedia on Answers.com. This article is licensed under the Creative Commons Attribution/Share-Alike License. It uses material from the Wikipedia article Market price Read more

Follow us
Facebook Twitter
YouTube

Mentioned in

» More» More