Tuesday, June 12, 2007

Fucking microeconomics....

Writing about SubCin's excellant prices made me think of this. One of the basic ideas in microeconomics is that if a person is willing to pay more for something then they want it more than someone who's willing to pay less.

For example, Subterranean Cinema charges a really, really, great price of about $16.00 per disc for movies that are inaccessable anywhere else. They potentially could charge more.

Now, while this is in general a good price for the discs, that $16.00 means different things to different people. For one person, spending $16 dollars on a DVD is a real choice because their monthly, or biweekly, disposable income is really limited; so spending that money is a sacrifice with a trade off involved. For another person spending $16 dollars on a DVD is nothing. They could walk into a store and just, on a whim, buy three new CDs that they don't really care about and it wouldn't hurt them in any way.

Does the fact that one person could, and maybe would, pay much more for a rare DVD mean that they want it more than someone who's only able to pay less? Or is this amount of satisfaction tied more to the class system than it is to money being an honest measure of the positive utility that an object purchased brings?

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