The Law of Diminishing Marginal Utility
The concept of distributive efficiency is based on the law of diminishing marginal utility. According to this economic law, as a person gets more to spend, he will buy things that give him less and less utility. For example, if a person is given a gift certificate for a music download (and has no way to resell the certificate), he will use the gift certificate to purchase the song he will enjoy the most. If he is given another, we will buy his second favorite song. The process continues as long as the man keeps getting certificates for downloads. Each additional song the person buys is slightly less desirable than the one before.
Read more about this topic: Distributive Efficiency
Famous quotes containing the words the law, law, diminishing, marginal and/or utility:
“Here, lads, we live by the law of the taiga. But even here people manage to live. D’you know who are the ones the camps finish off? Those who lick other men’s left-overs, those who set store by the doctors, and those who peach on their mates.”
—Alexander Solzhenitsyn (b. 1918)
“A strong person makes the law and custom null before his own will.”
—Ralph Waldo Emerson (1803–1882)
“Back from that great-grandfather I have come
to puzzle a bending gravestone for his sake,
to question this diminishing and feed a minimum
of children their careful slice of suburban cake.”
—Anne Sexton (1928–1974)
“Most works of art are effectively treated as commodities and most artists, even when they justly claim quite other intentions, are effectively treated as a category of independent craftsmen or skilled workers producing a certain kind of marginal commodity.”
—Raymond Williams (1921–1988)
“Moral sensibilities are nowadays at such cross-purposes that to one man a morality is proved by its utility, while to another its utility refutes it.”
—Friedrich Nietzsche (1844–1900)