How does Menger's theory apply to modern pricing?
My principles of subjective value and marginal utility remain profoundly relevant to understanding modern pricing. Consider the price of water versus diamonds. Water is essential for life, yet typically cheap because it is abundant; its marginal utility is low. Diamonds, while less essential, are scarce, making their marginal utility high and thus their price elevated. Every purchase decision, from a consumer buying bread to a firm acquiring raw materials, is guided by this calculus of marginal satisfaction and perceived value.
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