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Pastimes : Austrian Economics, a lens on everyday reality -- Ignore unavailable to you. Want to Upgrade?

To: Don Lloyd who wrote (299)	11/16/2003 3:30:28 AM
From: gpowell	Read Replies (1) \| Respond to of 445

For finite resources, exchanges for goods that are valued for their subjective use value will always be non-reversible. My comment <<<,This is a true only in certain markets and only for some market participants within those applicable markets.>>>> was prompted by your use of term “substantial subjective preference “. In all market exchanges, there will be at least one exchange that is very close to indifferent. This doesn’t imply that this particular exchange is reversible. The satisfaction that a given good provides depends not only on what the good can be used for, but also on what money price must be paid for it. A more precise statement is that that the change in utility is the difference between the decision maker’s reservation price for the good and the market price of the good. As a supplier attempts to approach a consumer's reservation price, if we assume that such exists, from below, the good will fall in its ranking on the consumer's subjective scale of value because of the required price increases. This is precisely what gives rise to a downward sloping demand curve. Before the reservation price is reached, the good will have fallen to a ranking that is unachievable with limited resources. Not possible. Only after price exceeds a particular decision maker’s reservation price does that demander’s demand cease and only after all reservation prices are exceeded does the demand for the good drop to zero. A demand curve is nothing more than a schedule of quantities demanded at particular reservation prices. Rothbard: Some fallacies relating to utility. I’d rather you demonstrated to me the flaws in my assumptions – using the actual definitions I have provided. If you would like to employ Rothbard’s work then do so. I felt your unwillingness to embrace the concept of ordinal utility functions had a lot to do with Rothbard’s work, but, conceptually, ordinal utility and Rothbard’s value scale are equivalent.