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The equation you just posted is the seller's value equasion. That's how the seller measures value in order to price the goods.

Things are priced by the buyer according to perceived value also, but using a different equation. a sale occur when the two points close enough that either or both parties are willing to adjust their price point to make the sale.

The seller "prices" the goods at marginal cost + profit. The buyer decides if there is enough values at that price for her to make the purchase.




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