# Lec 5 question: MUs same vs leisure having higher MU

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• #18926

I’m having trouble understanding the following sentence (from lecture 5 slide 4).

Economize by allocating across goods so that no value differ. remain: MUs are the same

The implication is that if there is no action, that means the marginal utilities of all goods are the same, but I don’t understand why this is true. Doesn’t it just mean that the marginal utility of leisure is higher than that of the next highest good? It’s difficult to wrap my head around the difference between no action vs consuming leisure as a good. Is choosing leisure an action? If so, aren’t we always engaged in some action? Thanks in advance for any clarification or other ways to think about it that might be helpful.

Also, is there a way to search the forum? I don’t have time to scan through all 35 pages of topics to check whether my question has already been asked.

#18927
jmherbener
Participant

The context of Lecture 5, slide 4 is a person has different consumer goods, of which the units of each can be put to different ends. The units of each good exhibit diminishing marginal utility as a person allocate them to the highest-valued ends first (logically) and then to progressively less-valuable ends. In choosing between using one of the goods, say X, rather than the other, say Y, the person will choose to act with the good that has the highest MU (for using the 1st unit), say X. But since using more of X lowers its MU (for using the 2nd unit, and so on), acting with Y would be chosen when its MU (for using its 1st unit) exceed the MU of X for the not yet chosen unit (say the 4th unit). The greatest utility in allocating the two goods, then, comes by using their units in such a way that their MUs do not differ significantly. Otherwise, the person could reallocate units away from the lower MU unit of one good and toward the higher MU unit of the other good.

Leisure is a good and therefore subject to the same analysis. So, yes we are always engaged in action as long as we have unmet ends. But the logical requisite of explaining what particular acts of consumption a person is engaged in is differences in the MU of the units of different goods. This is what the slide is referring to when it says, “action is renewed by changes in underlying factors that regenerate differences in MUs.” It’s not a reference to action per se, but to particular acts of consumption.

Of course, consumption is only one subcategory of action. Production and trade are other subcategories. So, a person would also be choosing across acts of consumption, acts of production, and acts of trade.

#18928

Thanks for the explanation! It all makes sense now. The key point I was missing is that leisure was not one of the available means in the way the example was defined. The example was just illustrating what actions would take place under the assumption that the individual only has those two means as options to choose from.

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