Diminishing McValue?
In Econ 211, we often talk about the principle of diminishing marginal value. We say, that as you increase the rate of consumption, the marginal value eventually diminishes.
When we are being lazy or sloppy, we often neglect that there is a time dimension in this concept. As you increase the *rate* of consumption… This means so many goods per day or per week.
In my class, we talked about the diminishing marginal value of consuming BLTs. Consuming the first BLT per day has a higher marginal value than the second BLT per day. It would be reasonable to assume that the marginal value of the 23,000th BLT per day would be exceedingly low.
Now read this article?
And yet that man ate 23,000 Big Macs. Is our theory all wrong?
If we forgot about the rate dimension, you might ask what is the marginal value of the 23,000th Big Mac?
But he has consumed these Big Macs over a long period. Given that he eats roughly 3 a day, we do know the marginal value of the 3rd is lower than marginal value of the 2nd. Because he voluntarily purchases the 3rd Big Mac, that tells us his marginal value of the 3rd Big Mac per day still exceeds the price.
I believe we also know something about how the marginal value of the 4th Big Mac per day compares to the price too.
Admittedly technical and a bit boring – but we don’t forget there is a time dimension in our marginal values and demand curves.
–CT
