What is Monetary Value?

Definition: Monetary value is the amount of currency that would be exchanged for the sale of a good or service. It is commonly understood as the worth in cash that something has within the open market.

What Does Monetary Value Mean?

Nowadays almost everything has monetary value. The modern economic system governing nearly the entire world imposes a price in cash for each good and service. Any kind of items such as houses, lands and personal goods has monetary values but also labor and services and even intangible goods such as patents and property rights.

Monetary value is usually set in competitive markets through supply and demand, which are the invisible forces that define prices. This is not applicable when the government regulates heavily the market or there is a small number of suppliers and buyers to make it competitive.

In addition, particular situations or events might dramatically change the monetary value of an item, especially in non-competitive markets. For example, a coat can have a price of US$120 in a populated city but a person who lost his coat at a cold mountain could be willing to pay much more.


Lisa Hamilton used to prepare a large cake every Friday for a orphanage located nearby as a nice evening snack for the children that lived there. The cake was not common because it was a special recipe that she learned from a Latin American friend years ago. Lisa was recently fired because of financial problems faced by her employer and therefore she became suddenly unemployed.

A friend of her suggested that she could sell those cakes to earn some income. But Lisa did not know the monetary value of the cake because she always gave it for free. After doing some research among friends and relatives, they told Lisa that every cake could be sold at US$15, because of the unique ingredients and flavor. She was glad to hear it and thus started what became a few months later a prosperous business.

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