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Paying $1 extra for a better apple is worth it if you value the better flavor by at least that much. It shouldn't matter whether the choice is between $4 and $5
by jtolmar 11y ago
Paying $1 extra for a better apple is worth it if you value the better flavor by at least that much. It shouldn't matter whether the choice is between $4 and $5 or between $10 and $11 - how did that dollar become less valuable, or the apple tastier?
"Humans act like money is proportionate when it's actually linear," is the crux of a wide variety of "surprising" microeconomic facts. People are more likely to drive across town to save money on a fancy pen that could cost $4 or $8 than they are to drive across town to save money on a suit that could cost $320 or $324.
(Yes, there are cases where there are good arguments that the utility of money isn't linear, but these are not those cases.)
- unclebucknasty 11y agoSeems this would be counter-intuitive only in a vacuum; that is to say, were there no such thing as opportunity cost. Perhaps that's what you meant by "utility of money" not being linear. And, I agree with that point. Where we differ is that I don't see how you are acknowledging that in only some cases. The degree may change, but not the underlying concept.
- venomsnake 11y agoIt is not like that. Because there is also quantity. Lets assume that good apples are $5, great $10 - for $10 I get one kg of great and 2 of $5. The great apple have to provide twice bang for the buck to be competitive. If we slap 20$ tariff - for $30 bucks i get 1kg of great apples or 1.2 kg of good apples. (That is assuming I want to eat roughly a kg of apples)