| marginal economy? | | | | maximize your profit. Of course, you use your |
| Think it this way, which do you need more, gold | | | | water for what’s the most useful first. |
| or water? | | | | Yes, but why is the value of water so low? |
| Of course you need water more. | | | | Say the value of water is higher than that. Say it |
| Which one will you pay more money for? One | | | | is $5 per gallon. The satisfaction you’ll get |
| kilogram of gold or one kilogram of water? Of | | | | from washing your car is $1 per gallon. Then you |
| course, gold. | | | | simply don’t wash your car. |
| Why? | | | | Say the value is lower than that. The satisfaction |
| That's because in economy, only the marginal | | | | of washing your car is $1 per gallon. However, |
| matters. What does that mean? | | | | water is so abundant that its cost is only $0.50. |
| Water is precious. | | | | Then you’ll use water for stuffs that give |
| However, the value of water is the value of that | | | | even less satisfaction, such as washing your |
| least useful water that you still use anyway. | | | | house. |
| You use water to drink, you use water to take a | | | | In fact, water can be so abundant that the price |
| shower, you use water to water your plants, | | | | is negative. A negative price means that |
| then you use water to wash your car. | | | | you’re willing to spend money to get rid |
| Obviously, the water that you drink is much more | | | | that water. Such is the case during a flood. |
| useful than the water that you use to wash your | | | | In which case, you’ll actually spend money |
| car. However, the value of water is the value of | | | | to get rid of water, such as buying water pumps. |
| that least useful water. | | | | That’s what happened to one of my |
| Why is it so? | | | | grandmas because her house is often flooded. |
| That’s because you’re trying to | | | | What’s the moral of the story? Be rare. |