--- Tigger <[EMAIL PROTECTED]> wrote:

> Fred (& Alpius) are acting dense.

Density is efficient.  With greater density, we get more mass per volume,
thus a more efficient use of space.

> A desire to earn more than the neighbors seems to say that at a level
> equal to the neighbor, the next dollar has a (much?) greater return than
> the prior few dollars--obviously contradicting the "diminishing".

This does not contradict diminishing marginal utility.  DMU proposes that
for a given good, after some amount, extra amounts yield ever diminishing
extra utility.
For a different good, marginal utility starts all over again.  I get
diminishing marginal utility from consuming more and more apple, but if I
switch to organge, my marginal utility can go up.

The good of beating one's neighbor is a different good than that goods
obtained for incomes up to that of the neighbor.

If a particular threshold of income is needed in order to get utility from
a good (i.e. having more than the neighbor), marginal utility theory is not
contradicted but simply does not apply.  The maximization of utility from a
mix of goods implies that the goods are obtainable.  Once one achieves the
threshold and can then obtain the good, marginal utility kicks in.  One
gets more of the new good until its marginal utility per cost is equal to
that of anything else.  The implication is that after the threshold, one
would strive to get more income until extra neighbor-beating has the same
utility as extra other goods or extra leisure.

Fred Foldvary


Reply via email to