Dictionary of Arguments

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Mause I 53
Consumption theory/Neoclassical theory: Consumption theory is based on subjective value theory, i.e. the assumption that the value of a good depends exclusively on its subjectively perceived value. If one assumes decreasing marginal utility (i.e. the benefit of an additionally consumed unit of a good is the smaller the more of this good is already consumed), then the central result of consumer theory can be derived, the marginal utility compensation law. Accordingly, households maximise their benefits by consuming so much of each good that the marginal benefits are the same relative to the respective commodity prices. This law implies that the exchange value, i.e. the price of a good, is determined by its marginal utility. In this way, the famous value paradox could be solved, which says that important and useful goods (such as water) can be much cheaper than unimportant goods of little use (such as diamonds). Since the marginal utility determines the price and that decreases with the increase in the available quantity, very useful goods can also be cheap if they are abundant, or less useful goods can be expensive if they are rare.

Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution.
The note [Author1]Vs[Author2] or [Author]Vs[term] is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition.
Neoclassical Economics
Mause I
Karsten Mause
Christian Müller
Klaus Schubert,
Politik und Wirtschaft: Ein integratives Kompendium Wiesbaden 2018

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