The Curmudgeonly Professor

Econ 110 Lesson: How to Tell if the Point of Diminishing Marginal Utility has been Reached

One of the most important principles of basic economics is the Law of Diminishing Marginal Utility.  Just because the Law contains three multi-syllable words, students assume that this law is so technically complex and arcane that they can never understand it.  Besides, their roommates, their parents,and  their friends all warned them not to take economics in the first place.  "It's dry,' they say.  "Too theoretical and impractical, " they opine.  "I couldn't pass it and I doubt you can pass it either," they warn.

Nonetheless the Law of Diminishing Marginal Utility states unequivocally that increased marginal increments of consumption of a specific item lead to diminishing marginal increments of utility, or satisfaction.  There, was that so hard?  Because "the Law" often did not penetrate the minds of the eager students in the back row  of a 350 student class, who were busy checking out the members of the opposite sex in their immediate vicinity, I explained:  "If you eat too many bananas, eventually you will barf."  When I see students after 20 years or more since taking Econ 110, they still remember the bananas and barf connection.

So here are five ways to tell if you have NOT reached the Point of Diminishing Marginal Utility:

1. You find that you are enjoying each additional Progressive Insurance ad more and more after seeing it hundreds of time in a day, thousands of times in a week.  You can hardly wait to see the Progressive Insurance lady a few hundred more times before the day is over.
2. Your first week of Econ 110 was exciting and your second week was so interesting you decided to major in economics, much to the disappointment of your parents, who expected you to follow in daddy's footsteps and become  a gastroenterologist.
3. You find that each time you wash the dishes or the laundry or sweep the floor, you are enjoying the work more and more each time.
4. You find your room mate's loud snoring enjoyable.
5. You still want to marry the girl of your dreams even though she hates basketball, football, soccer, golf, rugby, baseball, softball, badminton, and pingpong, and vows that she will never watch any of these wretched activities on TV with you.

Now you have the hang of it.  We will have a multiple choice and essay test Monday to see if you have mastered this complex and entertaining theory.  Please bring a bluebook.  Do not bring your iPhone, iPad, cell phone, blackberry, iPod, and any and all other electronic, mechanical, or old-fashioned methods of bringing accessible information to class to consult during the exam.  And no, I don't care if you are getting married on Monday or if it's the first day of the deer hunt, you must put first priorities first.  That's what Steven Covey says, and people pay a lot of money to read the first couple of chapters of his book.  See you Monday.  Class dismissed.

 

 

 

Ten Things We Won't Have to Worry About if the End of the World Happens Saturday

Inasmuch as some prognosticators have forecast that the world will end on Saturday, here are ten things we won't have to worry about:

1. Raising the federal debt limit.
2. LeBron James won't have to wonder any more why he "took his talents to Miami."
3. I may postpone vacuuming and mopping the floors until I see for sure what will happen.
4. I may have some unrepented sins not reported or repented of in time for Saturday's deadline.
5. How many Republicans plan to run for President.
6. Whether the BCS fat cats will ultimately get busted for their unmitigated greed.
7. Whether I will ever get more than 355 followers on Twitter.
8. Whether some heretofore undiscovered episodes of Matlock will be found in a vault and released.
9. Whether the Heat will go to the finals and whether Dallas can beat them to keep their (the Heat's)  egos at a more humble level.
10. Whether all of the economically illiterate members of Congress and the voting public will ever learn enough economics to make sense out of economic policy.

But, just in case, I won't cancel my four newspaper subscriptions or my cable TV contract.  And I may order some more books from Amazon or Daedalus Books.  Just in case.

Economic Facts for April 6 2011: American's Tax Burden Falling

Perhaps the most frustrating aspect of being an economist is the cavalier attitude that so many people take, including politicians, about understanding actual data and factual information about economic data.  Instead, policy decisions too often are based on politics, not economics.  So the Curmudgeonly Professor will now embark on adding a few facts here and there to enlighten and brighten your lives, beginning with these facts from USA Today, April 6 2011, p. 1:

The total tax burden for Americans (all federal, state, and local taxes) has dropped to 23.6% of income in QI (Q is quarter) of 2011, down from 27% in the 70's, 80's, and 90's.  Note: the U.S. Bureau of Economic Analysis and the Bureau of Labor Statistics compile most of the economic data of importance).

While maybe we should stop whining, those of us who meticulously and honestly pay our taxes wish everyone would do so, and that fat cat corporations and institutions who scrupulously (legally, we presume) avoid paying taxes would pay up their fair share, and that out-and-out tax cheaters would have to pay their share.  Including those who find tax reduction gurus who buy out their IRS debt at a dime on the dollar.