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30 August, 21:29

John's home is up for sale. He originally bought it five years ago for $300,000. Its current value is $350,000. His real estate agent notified him that a buyer just made an offer on his home for $365,000, which is the price other similar homes in the neighborhood are selling for and John accepts. What does the price of $365,000 represent?

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  1. 30 August, 21:48
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    Market value

    Explanation:

    The market value of a product is the price at which a buyer is willing to purchase a good irrespective of prevalent price of a commodity. It is that amount a buyer and seller are willing to strike a deal for given normal market conditions.

    In this scenario John originally bought his five years ago for $300,000. Its current value is $350,000. His real estate agent notified him that a buyer just made an offer on his home for $365,000.

    Despite the house now being $350,000, $365,000 is the market price at which the buyer and seller are willing to settle.
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