The Law of DIMINUTIVE MARGINAL UTILITY diagram is a concept that many of us are familiar with from the movie Minority Report. It illustrates how we may want to consume more of something if it’s rare (e.g., a rare steak) or if we’re not sure how much of something we’ll have in the future (e.g., how much steak will I have in the future?).
This is an interesting concept and the result of trying to use the marginal utility of a resource to our advantage. If we are unsure how much steak we will have in the future, then it would make sense to consume more of it. For those of us who don’t even know how much steak we will have in the future, it would be better to waste it in a different way. It could be as simple as buying steak futures and investing in them.
Well, the only other option to that is to use the marginal utility of steak to our own advantage. I mean, you could make a steak steak and then give the steak to someone who has no utility, then he has no marginal utility. But then you’d be making a trade off.
This is a great illustration of the marginal utility of steak. Let’s say you are buying a steak for your daughter for a dinner party. You save some money for the dinner by eating the steak once. She will use the steak and consume it. Then you would get a steak from her for the dinner. She will then use the steak and consume it. In this case you get a steak for the dinner and she consumes it.
The problem with this is that steak is a scarce resource. So if you buy a steak for your daughter for a dinner party she will probably buy two, or at worst, three. So if you buy this steak now, you might get it, but you will also waste it. On the other hand, if you go out and buy a steak for your daughter now, you can save money and use it for your dinner party when you’re in the mood to eat.
In this case you are going to save money and reduce your consumption of steak by purchasing the steak now for your daughter for a dinner party, instead of buying it at a steak farm for later. So the marginal utility of a steak is probably higher now that you’ve got it for a dinner party.
When it comes to the law of diminishing marginal utility, steak is probably worth the marginal cost. We would be more likely to buy steak for our daughter now if she was an adult so that when she became a teenager, she could buy steak for herself. So the marginal utility of a steak is probably lower now that youve got it for a dinner party.
So just as you may think that steak (or any other food) has more utility now that youve got it for a dinner party (because of the way steak is consumed), you could also think that it has less utility now that youve got it for a dinner party because steak is not as good at keeping you healthy.
I think the marginal utility of steak is lower now that youve got it for a dinner party because steak is not as good at keeping you healthy. Because while you can cook steak and fry it to a nice crispy, juicy brown, it does not provide the same amount of nutrition as a steak freshly made from grass-fed, humanely raised meats.
