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