Asked by Archit Barua on Jul 02, 2024
Verified
A department store buys a wool coat for $120 and sets its retail price at $300. The coat costs $85 to produce. When the coat doesn't sell, the store marks the price down to $200, then $100, and finally $70. At $70, Amy buys the coat. What was the coat's true value? Why?
True Value
The actual, inherent worth of an asset, commodity, or transaction, as opposed to its market price or cost of production.
Retail Price
The price at which goods or services are sold to the end consumer, typically higher than the wholesale price to cover business costs and generate profit.
Department Store
A large retail establishment offering a wide range of products across different categories, typically organized in separate departments.
- Evaluate economic decisions using the concept of true value and economic perspectives.
Verified Answer
NM
Natalia Matamoros7 days ago
Final Answer :
Since the coat sold for $70, we would have to say that this is its value. In economics, the value of a product is assigned when a trade is made. Retail prices, costs of production, etc. are not relevant when assigning value. Goods are valued based on what individuals will give for them.
Learning Objectives
- Evaluate economic decisions using the concept of true value and economic perspectives.