Subjective Theory of Value

Posted in Finance, Accounting and Economics Terms, Total Reads: 215
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Definition: Subjective Theory of Value

Subjective theory of value came into picture when researchers on pricing of an object discovered that the product should be priced on its availability and how much the demand for the product is in market rather than just pricing the product based on the cost incurred in its making.

Various economic thinkers have developed this kind of approach. As per the logic, an objects value depends on how the different people perceive the value to be and also on the basis of its availability in the market.

Scarcity can cause an increase in its price whereas abundance can cause a decrease. Also, the usage forms one more factor in determining the subjective value of the object.

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