Final answer:
Market value is defined by the price at which goods can be traded without undue pressure on either buyer or seller. Market equilibrium is a state of balance where the quantity supplied matches the quantity demanded, and markets tend to move towards this point if not already there.
Step-by-step explanation:
The concept of market value is a critical component of economics, particularly when discussing how buyers and sellers interact within a market. In essence, the market value of a good or service is the price at which it can be sold in an open and competitive market where neither buyer nor seller is under any undue pressure to complete the transaction.
Market equilibrium plays a central role in determining market value. It is achieved when the market price enables the quantity supplied to equal the quantity demanded. In other words, at the equilibrium price, the amount of goods or services that sellers are willing to supply perfectly matches what buyers are willing to pay, leading to a balance within the market.
When a market is not at equilibrium, economic pressures will naturally work to move the market back towards equilibrium. This movement can be a result of changes in supply, demand, or both, as the market seeks to regain its natural state of balance. Understanding this dynamic is crucial for participants in any market.