What defines the monetary value of a product as established by supply and demand?

The monetary value of a product as established by supply and demand is defined as price. Price reflects the amount that consumers are willing to pay for a good or service at a given time, influenced by both the supply of the product available in the market and the demand for that product by consumers. When demand for a product increases and supply remains constant, the price tends to rise. Conversely, if the supply exceeds demand, the price may decrease.

This dynamic relationship illustrates how price is not a fixed number but a fluid figure that fluctuates based on market conditions. Understanding price is crucial in economics and business as it directly relates to consumer behavior, market trends, and overall economic health.

In contrast, cost typically refers to the amount incurred to produce a product, which does not directly determine its market price. Value can represent a broader concept of worth based on various subjective factors, while expense pertains to the actual outlay of money on goods or services, primarily from the perspective of keeping financial records.