Reply To: Value Differences Among Consumer Goods when Economizing


Don’t let the tail of formal analysis wag the dog of human action. MU analysis is used to explain human action, it has no other meaning. Sometimes a person trades one good for another, sometimes he does not do so. In the former case he ranks the first good higher than the second and in the latter case he ranks the second good below the first. If he has only one unit of each good, then a sizable gap might exist between the value of the the two units. If we stipulate that the goods remain scarce to him and yet are available to him in multiple units, each of which can be used to attain a different end, then he can trade between actions with units of the first and actions with units of the second good in a way that narrows the value gap between the last unit of the first and the last unit of the second good. Even if the goods were indefinitely divisible, however, the value difference (while shrinking to a minimum) would not disappear entirely because to reach his preferred outcome he must choose to give up action with the last unit of one good to obtain action with the last unit of the other good. At that point, he could not reallocate the units of the different goods further without reducing his overall satisfaction.