Economics tells us that as the supply of a commodity shrinks the value it brings is more. This is the law of marginal utility. It also explains us a lot of the demand side of the famous supply-demand curve. I was reading about the 1976-77 drought in the Marin County here in California and how the residents had to cut back on the water usage by as much as 65%. This made me think that at times we take our water supplies for granted.
Marin Municipal Water District
California Drought Preparedness
2 comments:
I couldn't help but notice that your economic logic is somewhat erroneous. Supply has absolutely nothing to do with marginal utility - in fact, utility is completely of of supply. Utility is of a direct result of consumption - consumption and supply are two very different concepts. Not to mention, a change in supply means absolutely without taking into consideration demand. If demand is able to match the change in supply, no changes will take place. Regardless, though, changes in demand and supply have no impact on utility.
Go read up on utility theory. This is the problem with people trying to feign an understanding of economics....
I think you totally missed the point of the post. To explain it further, a product or service is perceived to be more valuable at a shorter supply cycle.
If you look at it from the other side , it means as the supply is increased the "joy" (in terms of utility) that the people get out of this product or service lessens since people start to get satiated due to an over supply.
Hope that helps explain it to you.
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