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