Mike Dariano

hide

Read Next

Economics is going to the birds (thoughts)

My mother-in-law is watching her mother’s birds for the rest of the month and an interesting little bit of economics reared it’s mangled head during their feeding last night. My daughter was dumping the food from the box and into their bowl when she was instructed not to give them too much food or else they will start throwing it around and making a mess in and outside of their cage by throwing the food everywhere.

This reminded me of the law of diminishing marginal utility where the first unit of a good or service brings the consumer more utility than each subsequent unit. The most frequent examples we usually understand is cars and dessert. If you have one car that’s usually pretty helpful. If you have two that’s nice in case one breaks down but you really just need one. If you have three, then you have a backup for one and two or a pleasure car. Each car brings less utility. The same goes for eating your dessert. The first bite is always the best – each bite after is probably not quite as enjoyable.

Rendering New Theme...