Final Utility - Revision history

Huckelberry: Clarify, clarify

2011-06-05T19:08:04Z

Clarify, clarify

← Older revision		Revision as of 19:08, 5 June 2011
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	For example, if we lost a unit of a good, the ''[[value]]'' of the loss would be the value of the least important use of the good. This last good, which represents its final utility, was being applied to our least important wants. In the case of the lost good, it is replaced and the value to which we can assign the loss is not the value of the first most important use of the good, but the least important--what we call the final utility.<ref>[[Böhm-Bawerk]], Eugen von. "The Law of Final Utility - Eugen von Böhm-Bawerk - Mises Daily ." The Ludwig von Mises Institute . http://mises.org/daily/4637 (accessed April 29, 2011).</ref>		For example, if we lost a unit of a good, the ''[[value]]'' of the loss would be the value of the least important use of the good. This last good, which represents its final utility, was being applied to our least important wants. In the case of the lost good, it is replaced and the value to which we can assign the loss is not the value of the first most important use of the good, but the least important--what we call the final utility.<ref>[[Böhm-Bawerk]], Eugen von. "The Law of Final Utility - Eugen von Böhm-Bawerk - Mises Daily ." The Ludwig von Mises Institute . http://mises.org/daily/4637 (accessed April 29, 2011).</ref>

	According to the [[law of marginal utility]], the value of each good in a stock of identical goods is [[utility]] of the last and most easily dispensable unit.<ref>von Böhm-Bawerk, Eugen, trans. George Reisman. "Eugen von Böhm-Bawerk’s “Value, Cost, and Marginal Utility”." Ludwig von Mises Institute. mises.org/pdf/asc/2002/asc8-reisman.pdf (accessed April 30, 2011).</ref> That is why price is said to be determined by supply and demand: the price reflects ~~all~~ the ~~uses~~ of the good, ~~including~~ the last use. If ~~the price increases, because of~~ a shortage of supply, the least ~~desirable~~ uses ~~of a good are not considered in~~ the ~~purchase of the good~~ and ~~therefore~~ the price ''~~must~~'' ~~"reflect"~~ the ~~marginal utility~~ of the ~~good~~.		According to the [[law of marginal utility]], the value of each good in a stock of identical goods is [[utility]] of the last and most easily dispensable unit.<ref>von Böhm-Bawerk, Eugen, trans. George Reisman. "Eugen von Böhm-Bawerk’s “Value, Cost, and Marginal Utility”." Ludwig von Mises Institute. mises.org/pdf/asc/2002/asc8-reisman.pdf (accessed April 30, 2011).</ref> That is why price is said to be determined by supply and demand: the price reflects the (approximate and average) value of the good, but most closely reflects the value of the last use. If there is a shortage of supply, the good will cease being applied to its least important uses. All else being equal, the price will increase and the increase in price represents, so to speak, the value we attribute to the ''new'' last use. Before, with a larger supply, the last use was of less value to us. With a smaller supply the value of the last use is necessarily more important because we always satisfy our more important wants first. Therefore the increase in price can be seen as a reflection of the increase in value we attribute to the last use of the supply.

	[[Ludwig von Mises]] writes:		[[Ludwig von Mises]] writes:

Huckelberry: /* Example */ revised example..

2011-05-25T17:43:35Z

Example: revised example..

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	==Example==		==Example==

	If a hurricane struck Florida and there was a shortage of water, everything else equal, the [[price]] of bottled water would increase. Water in Florida, before this [[shortage]], was used for drinking water, cooking, watering plants, and bathing. With the tap off, the price of bottled water has increased to such an extent that bottled water will surely not be purchased for watering plants or bathing. That is, the increase in price reflects the increase in the value we attribute to the last unit in the [[supply]] of the [[good]]. ~~Before~~, water was valued according to the fact that it would be used for bathing and watering plants. Now, with a shortage, it is valued according to its ability to quench thirst and cook food. The latter uses importance ~~(aside from the efficient allocation of resources that prices bring)~~ is "approximated" in the price of the good. The bottled water which now costs, say, $20 dollars a bottle, is an approximation of the [[value]] attribute to drinking water, cooking water, and whatever else it might be used for at the higher price--given that previous uses are not considered due to the shortage of supply and its corollary, the increase in price. That is why it is said that a homogeneous stock of goods is valued according to its final utility--according to its last use of a stock of a good.		If a hurricane struck Florida and there was a shortage of water, everything else equal, the [[price]] of bottled water would increase. Water in Florida, before this [[shortage]], was used for drinking water, cooking, watering plants, and bathing. With the tap off, the price of bottled water has increased to such an extent that bottled water will surely not be purchased for watering plants or bathing. That is, the increase in price reflects the increase in the value we attribute to the last use of the last unit in the [[supply]] of the [[good]]. To explain, before the hurricane water was valued according to the fact that it would be used for bathing and watering plants. Now, with a shortage, it is valued according to its ability to quench thirst and cook food. The latter uses importance is "approximated" in the price of the good. The bottled water which now costs, say, $20 dollars a bottle, is an approximation of the [[value]] attribute to drinking water, cooking water, and whatever else it might be used for at the higher price--given that previous uses are not considered due to the shortage of supply and its corollary, the increase in price. That is why it is said that a homogeneous stock of goods is valued according to its final utility--according to its last use of a stock of a good.

			A supply of a good will be applied to most important wants first and least important wants last. When there is a shortage, all else being equal, the price increases. The small supply is being used for the most important wants, but is not being used for the least important wants. In this sense, we can say the increase in price represents the increase in value which the last unit of the supply is filling. Before water cost very little and was used for washing and watering plants. Now, since there is not enough for washing and watering plants and it is instead being used exclusively to drink and cook--the value we attribute to those activities is, in a sense, communicated through the higher price. The price reflects that importance of the last use of a supply--and in this case the supply was truncated to only allow for the more important uses.

			Final utility is the logical conclusion of [[marginal utility]] and a corner stone of [[price]] theory.

	==Reference==		==Reference==

Huckelberry: /* Example */

2011-05-23T16:54:23Z

Example

← Older revision		Revision as of 16:54, 23 May 2011
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	==Example==		==Example==

	If a hurricane struck Florida and there was a shortage of water, everything else equal, the [[price]] of bottled water would increase. Water in Florida, before this [[shortage]], was used for drinking water, cooking, watering plants, and bathing. With the tap off, the price of bottled water has increased to such an extent that bottled water will surely not be purchased for watering plants or bathing. That is, the increase in price reflects the increase in the value we attribute to the last unit in the [[supply]] of the [[good]]. Before, water was valued according to the fact that it would be used for bathing and watering plants. Now, with a shortage, it is valued according to its ability to quench thirst and cook food. The latter uses importance (aside from the efficient allocation of resources that prices bring) is "approximated" in the price of the good. The bottled water which now costs, say, $20 dollars a bottle, is an approximation of the [[value]] attribute to drinking water, cooking water, and whatever else it might be used for at the higher price--given that previous uses are not considered due to the shortage of supply and its ~~colliery~~, the increase in price. That is why it is said that a homogeneous stock of goods is valued according to its final utility--according to its last use of a stock of a good.		If a hurricane struck Florida and there was a shortage of water, everything else equal, the [[price]] of bottled water would increase. Water in Florida, before this [[shortage]], was used for drinking water, cooking, watering plants, and bathing. With the tap off, the price of bottled water has increased to such an extent that bottled water will surely not be purchased for watering plants or bathing. That is, the increase in price reflects the increase in the value we attribute to the last unit in the [[supply]] of the [[good]]. Before, water was valued according to the fact that it would be used for bathing and watering plants. Now, with a shortage, it is valued according to its ability to quench thirst and cook food. The latter uses importance (aside from the efficient allocation of resources that prices bring) is "approximated" in the price of the good. The bottled water which now costs, say, $20 dollars a bottle, is an approximation of the [[value]] attribute to drinking water, cooking water, and whatever else it might be used for at the higher price--given that previous uses are not considered due to the shortage of supply and its corollary, the increase in price. That is why it is said that a homogeneous stock of goods is valued according to its final utility--according to its last use of a stock of a good.

	==Reference==		==Reference==

Huckelberry: added an example

2011-05-23T16:52:03Z

added an example

← Older revision		Revision as of 16:52, 23 May 2011
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	'''Final Utility''' is the [[utility]] of a [[good]] applied to our least desirable use of it. That is, the last (i.e., least important) use of a supply. If a use of a good must be given up, it will logically be the last use of the good we would choose~~. That is,~~ we give up the least important of our satisfactions first--which would be satisfied by the last good.		'''Final Utility''' is the [[utility]] of a [[good]] applied to our least desirable use of it. That is, the last (i.e., least important) use of a supply. If a use of a good must be given up, it will logically be the last use of the good we would choose: we give up the least important of our satisfactions first--which would be satisfied by the last good.
	:''See [[Law of Marginal Utility]]''		:''See [[Law of Marginal Utility]]''
	For example, if we lost a unit of a good, the ''[[value]]'' of the loss would be the value of the least important use of the good. This last good, which represents its final utility, was being applied to our least important wants. In the case of the lost good, it is replaced and the value to which we can assign the loss is not the value of the first most important use of the good, but the least important--what we call the final utility.<ref>[[Böhm-Bawerk]], Eugen von. "The Law of Final Utility - Eugen von Böhm-Bawerk - Mises Daily ." The Ludwig von Mises Institute . http://mises.org/daily/4637 (accessed April 29, 2011).</ref>		For example, if we lost a unit of a good, the ''[[value]]'' of the loss would be the value of the least important use of the good. This last good, which represents its final utility, was being applied to our least important wants. In the case of the lost good, it is replaced and the value to which we can assign the loss is not the value of the first most important use of the good, but the least important--what we call the final utility.<ref>[[Böhm-Bawerk]], Eugen von. "The Law of Final Utility - Eugen von Böhm-Bawerk - Mises Daily ." The Ludwig von Mises Institute . http://mises.org/daily/4637 (accessed April 29, 2011).</ref>

	According to the [[law of marginal utility]], the value of each good in a stock of identical goods is [[utility]] of the last and most easily dispensable unit.<ref>von Böhm-Bawerk, Eugen, trans. George Reisman. "Eugen von Böhm-Bawerk’s “Value, Cost, and Marginal Utility”." Ludwig von Mises Institute. mises.org/pdf/asc/2002/asc8-reisman.pdf (accessed April 30, 2011).</ref>		According to the [[law of marginal utility]], the value of each good in a stock of identical goods is [[utility]] of the last and most easily dispensable unit.<ref>von Böhm-Bawerk, Eugen, trans. George Reisman. "Eugen von Böhm-Bawerk’s “Value, Cost, and Marginal Utility”." Ludwig von Mises Institute. mises.org/pdf/asc/2002/asc8-reisman.pdf (accessed April 30, 2011).</ref> That is why price is said to be determined by supply and demand: the price reflects all the uses of the good, including the last use. If the price increases, because of a shortage of supply, the least desirable uses of a good are not considered in the purchase of the good and therefore the price ''must'' "reflect" the marginal utility of the good.

	[[Ludwig von Mises]] writes:		[[Ludwig von Mises]] writes:

	<blockquote>"When face with the problem of the value to be attached to one unit of a homogeneous supply, man decides on the basis of the value of the least important use he makes of the units of the whole supply; he decides on the basis of marginal utility."<ref name="humanaction_ch7sec1">[[Ludwig von Mises]]. [http://mises.org/humanaction/chap7sec1.asp VII. Action Within The World], 1. The Law of Marginal Utility, ''[[Human Action]]'', online version, referenced 2011-04-30.</ref></blockquote>		<blockquote>"When face with the problem of the value to be attached to one unit of a homogeneous supply, man decides on the basis of the value of the least important use he makes of the units of the whole supply; he decides on the basis of marginal utility."<ref name="humanaction_ch7sec1">[[Ludwig von Mises]]. [http://mises.org/humanaction/chap7sec1.asp VII. Action Within The World], 1. The Law of Marginal Utility, ''[[Human Action]]'', online version, referenced 2011-04-30.</ref></blockquote>

			==Example==

			If a hurricane struck Florida and there was a shortage of water, everything else equal, the [[price]] of bottled water would increase. Water in Florida, before this [[shortage]], was used for drinking water, cooking, watering plants, and bathing. With the tap off, the price of bottled water has increased to such an extent that bottled water will surely not be purchased for watering plants or bathing. That is, the increase in price reflects the increase in the value we attribute to the last unit in the [[supply]] of the [[good]]. Before, water was valued according to the fact that it would be used for bathing and watering plants. Now, with a shortage, it is valued according to its ability to quench thirst and cook food. The latter uses importance (aside from the efficient allocation of resources that prices bring) is "approximated" in the price of the good. The bottled water which now costs, say, $20 dollars a bottle, is an approximation of the [[value]] attribute to drinking water, cooking water, and whatever else it might be used for at the higher price--given that previous uses are not considered due to the shortage of supply and its colliery, the increase in price. That is why it is said that a homogeneous stock of goods is valued according to its final utility--according to its last use of a stock of a good.

	==Reference==		==Reference==

Huckelberry at 17:01, 30 April 2011

2011-04-30T17:01:42Z

← Older revision		Revision as of 17:01, 30 April 2011
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	'''Final Utility''' is the utility of ~~the~~ [[good]] applied to our least desirable use of it. That is, the last (i.e., least important) use of a supply. If a use of a good must be given up, it will logically be the last use of the good we would choose. That is, we give up the least important of our satisfactions first--which would be satisfied by the last good, or the final utility of the good.		'''Final Utility''' is the [[utility]] of a [[good]] applied to our least desirable use of it. That is, the last (i.e., least important) use of a supply. If a use of a good must be given up, it will logically be the last use of the good we would choose. That is, we give up the least important of our satisfactions first--which would be satisfied by the last good.
			:''See [[Law of Marginal Utility]]''
			For example, if we lost a unit of a good, the ''[[value]]'' of the loss would be the value of the least important use of the good. This last good, which represents its final utility, was being applied to our least important wants. In the case of the lost good, it is replaced and the value to which we can assign the loss is not the value of the first most important use of the good, but the least important--what we call the final utility.<ref>[[Böhm-Bawerk]], Eugen von. "The Law of Final Utility - Eugen von Böhm-Bawerk - Mises Daily ." The Ludwig von Mises Institute . http://mises.org/daily/4637 (accessed April 29, 2011).</ref>

	~~For example, if we lost a unit of a good,~~ the ''[[~~value~~]]~~'' of the loss would be~~ the value of ~~the least important~~ good ~~which replaced it. This last good, which represents its final~~ utility~~, is being applied to our least important wants. Therefore, in the case~~ of the ~~lost good, it is replaced~~ and ~~the value to which we can assign the loss is the final utility~~.<ref>[[Böhm-Bawerk]], Eugen ~~von~~. "~~The Law of Final Utility -~~ Eugen von Böhm-~~Bawerk - Mises Daily~~ ." ~~The~~ Ludwig von Mises Institute . ~~http://~~mises.org/~~daily~~/~~4637~~ (accessed April 29, 2011).</ref>		According to the [[law of marginal utility]], the value of each good in a stock of identical goods is [[utility]] of the last and most easily dispensable unit.<ref>von Böhm-Bawerk, Eugen, trans. George Reisman. "Eugen von Böhm-Bawerk’s “Value, Cost, and Marginal Utility”." Ludwig von Mises Institute. mises.org/pdf/asc/2002/asc8-reisman.pdf (accessed April 30, 2011).</ref>

	~~According to the~~ [[law of marginal utility]], the value of each good in a stock of identical goods is utility of the last and most easily dispensable unit.<ref>von Böhm-Bawerk, Eugen, trans. George Reisman. "Eugen von Böhm-Bawerk’s “Value, Cost, and Marginal Utility”." Ludwig von Mises ~~Institute. mises.org/pdf/asc/2002/asc8-reisman.pdf (accessed April 30, 2011).</ref>~~		[[Ludwig von Mises]] writes:

	~~:''See~~ [[Law of Marginal Utility]]''		<blockquote>"When face with the problem of the value to be attached to one unit of a homogeneous supply, man decides on the basis of the value of the least important use he makes of the units of the whole supply; he decides on the basis of marginal utility."<ref name="humanaction_ch7sec1">[[Ludwig von Mises]]. [http://mises.org/humanaction/chap7sec1.asp VII. Action Within The World], 1. The Law of Marginal Utility, ''[[Human Action]]'', online version, referenced 2011-04-30.</ref></blockquote>

	==Reference==		==Reference==

Huckelberry at 16:30, 30 April 2011

2011-04-30T16:30:48Z

← Older revision		Revision as of 16:30, 30 April 2011
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	For example, if we lost a unit of a good, the ''[[value]]'' of the loss would be the value of the least important good which replaced it. This last good, which represents its final utility, is being applied to our least important wants. Therefore, in the case of the lost good, it is replaced and the value to which we can assign the loss is the final utility.<ref>[[Böhm-Bawerk]], Eugen von. "The Law of Final Utility - Eugen von Böhm-Bawerk - Mises Daily ." The Ludwig von Mises Institute . http://mises.org/daily/4637 (accessed April 29, 2011).</ref>		For example, if we lost a unit of a good, the ''[[value]]'' of the loss would be the value of the least important good which replaced it. This last good, which represents its final utility, is being applied to our least important wants. Therefore, in the case of the lost good, it is replaced and the value to which we can assign the loss is the final utility.<ref>[[Böhm-Bawerk]], Eugen von. "The Law of Final Utility - Eugen von Böhm-Bawerk - Mises Daily ." The Ludwig von Mises Institute . http://mises.org/daily/4637 (accessed April 29, 2011).</ref>
	:See [[Law of Marginal Utility]]
			According to the [[law of marginal utility]], the value of each good in a stock of identical goods is utility of the last and most easily dispensable unit.<ref>von Böhm-Bawerk, Eugen, trans. George Reisman. "Eugen von Böhm-Bawerk’s “Value, Cost, and Marginal Utility”." Ludwig von Mises Institute. mises.org/pdf/asc/2002/asc8-reisman.pdf (accessed April 30, 2011).</ref>

			:''See [[Law of Marginal Utility]]''

	==Reference==		==Reference==

Huckelberry: Create (note: need to add price theory!)

2011-04-30T03:36:19Z

Create (note: need to add price theory!)

New page

'''Final Utility''' is the utility of the [[good]] applied to our least desirable use of it. That is, the last (i.e., least important) use of a supply. If a use of a good must be given up, it will logically be the last use of the good we would choose. That is, we give up the least important of our satisfactions first--which would be satisfied by the last good, or the final utility of the good.

For example, if we lost a unit of a good, the ''[[value]]'' of the loss would be the value of the least important good which replaced it. This last good, which represents its final utility, is being applied to our least important wants. Therefore, in the case of the lost good, it is replaced and the value to which we can assign the loss is the final utility.<ref>[[Böhm-Bawerk]], Eugen von. "The Law of Final Utility - Eugen von Böhm-Bawerk - Mises Daily ." The Ludwig von Mises Institute . http://mises.org/daily/4637 (accessed April 29, 2011).</ref>
:See [[Law of Marginal Utility]]

==Reference==
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