This topic uses the concept of utility. If you do not know or remember that term, you should probably look at this screen shot from the Mankiw's textbook.
Anyway, I wrote the following email to Bill Gates, known as the richest man is the world.
Dear Mr. Gates,
I am an loyal user of Microsoft products. I am very impressed by all the work you did for the cooperation. And you really deserve your richness.
But that is not the main reason I write this letter. I do it just to ask you a question. Do you think that everyone should try their best to increase the well-being of the whole world?
My answer is yes! And I think yours is the same!!
And as long as you think yes, I suggest you to write a $100 check to every person in my family. The reason is followed. I learned from my ECON 110 course that the utility function exhibits the property of diminishing marginal utility. Thus, as people get richer, the utility they get from each additional dollar falls. What that means is: the cost of your giving up $100 is less than the benefit of my receiving $100 since I am much poorer than your are. As the result, giving me $100 will increase the well-being of the whole society.
If your answer to the above question is yes and you think my explanation makes sense, please go ahead and do my request.
Here is our information. Name: Kim Tran, Travis Tran. Checks can be sent to
606W 1720N, Apt.136
Provo UT, 84604
Best regard.
Well, that's a common economics concept that every student, not only in U.S., but in Vietnam as well, learns in his or her freshman year, in the first lesson of micro economics credits. Is your discovery so great that you have to write a letter to Mr. Gates, one of the most successful businessman in the world?
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