This section explains the basic economic theory and concepts of economic valuation.
Economic value is one of many possible ways to define and measure value.
Although other types of value are often important, economic values are useful to consider when making economic choices choices that involve tradeoffs in allocating resources. Measures of economic value are based on what people want their preferences. Economists generally assume that individuals, not the government, are the best judges of what they want. Thus, the theory of economic valuation is based on individual preferences and choices. People express their preferences through the choices and tradeoffs that they make, given certain constraints, such as those on income or available time.