Good luck with the final!

@@DrAzevedoEcon thank you sir your videos has really helped me throughout this semester 💯

You're welcome!

There are a couple of things that are potentially confusing. First, don't confuse the idea of utility with GDP. We think of utility as a measure of the well-being a person gets from a good or service, while GDP is a measure of the economic activity that takes place in an economy. They aren't related like you're thinking. Second, for individual preferences, there's a difference between marginal utility and total utility. An example of this is the difference between diamonds and water. The price of diamonds is relatively high while they provide relatively little total utility compared to something like water. The price of water is relatively low but it provides us with a lot of total utility. The difference is that we have a high quantity of water (unless you're in the desert). At the margin, we are willing to pay relatively little for water because we have so much. With diamonds, we have relatively little and are therefore willing to pay a lot at the margin. It's the same idea as why the first bite of food when you're hungry is very satisfying. Then, as you take more bites, it becomes less satisfying (the marginal utility is declining)....until that last bite that you take....the one right before you think to yourself, "I'm stuffed," provides you with very little satisfaction at the margin. The more of something you have, the less you're willing to pay to get even more.

Thank you for your kind and detailed reply so quickly. But the question remains still as it is. I know that GDP is different in meaning and purpose from the concept of utility. The problem is output, and I just mentioned GDP as its common measure for easy and simple convenience. The level of marginal utility is depending on whether the output is high or low, determining the scarcity of goods. In an economy where output is scarce, the marginal utility of goods can reach extraordinary levels. This is analogous to the marginal utility of a glass of water in a desert-immense due to its rarity. When we consider items such as cars, bread, and watches, if produced in minimal quantities, their marginal utility not only escalates but could potentially become infinite. When the value assigned to each good is directly proportional to its scarcity through the level of its marginal utility, as youe second point, the aggregate value of goods can be substantial with a low output. This is because the worth of each item is magnified by its limited availability, which in turn inflates the overall valuation, despite a quantitatively smaller output on the other hand, according to the marginal utility value theory. In essence, while the overall output may be limited in volume, the cumulative price is exceedingly substantial, resulting in an immense GDP. Should value be predicated on marginal utility, such a strange circumstance could manifest.

@@doromamire I may be missing the point of what you're arguing. Nothing that you are saying runs contrary to the theory of marginal value. One thing I would point out is that when you say, "The level of marginal utility is depending on whether the output is high or low," this is incorrect. A person's marginal utility depends on that person's consumption....not the output produced in total. To somehow link up an individual person's utility with the total amount produced in an economy simply clouds the issue in my opinion. Keep in mind that prices are determined in markets, and GDP would be determined using those prices, not an individual's maximum willingness to pay. Also, this sentence, "When the value assigned to each good is directly proportional to its scarcity through the level of its marginal utility, as your second point, the aggregate value of goods can be substantial with a low output," is incorrect. You are confusing marginal value and total value. Just because the marginal value is high, does not imply that the aggregate value would be substantial. That is exactly the point....when you have almost none of something, the marginal value is high and the aggregate value is very low. If you have no water, you would be willing to pay a lot to have the first drink, but because you have no water, you are getting no value out of water....marginal value would be high and total value would be zero. Finally, this, "while the overall output may be limited in volume, the cumulative price is exceedingly substantial, resulting in an immense GDP" is incorrect. If output is limited in volume, driving prices up, then GDP would be small..... precisely because output is limited.

Thank you for your kind reply again. There still seems to be a gap in our thinking. However, I may not have said enough in some of my sentences. I would like to make them clear. (1) First point. You stopped quoting my statement halfway through. Here is the whole sentence. >> The level of marginal utility is depending on whether the output is high or low, determining the scarcity of goods. The key is presented in the participle construction. In the context of my argument, the reason why I'm making the quantity of output an issue is because it determines the scarcity of goods. As a simple example, consider that only one car, one loaf of bread, and one watch are produced. (Each kind of goods is produced in one piece only.) All of these goods would be as scarce as a glass of water in the desert. Then the marginal utility of each kind of goods would be extremely high, and the value of each kind of goods would also be very high. (2) and (3) Second and Third points. I should have added some words to the sentence you have mentioned: >> When the value assigned to each good is directly proportional to its scarcity through the level of its marginal utility, as youe second point, the aggregate value of goods can be substantial with a low output. as follows: >> When the value assigned to each KIND OF GOODS is directly proportional to its scarcity through the level of its marginal utility, as your (just misspelled) second point, the aggregate value of ALL KINDS OF GOODS can be substantial with a low output. Let me use the same example as above. If only one car, one loaf of bread, and one watch are produced, the value of each kind of goods is extremely high. The aggregate value of the national output for all these kinds of goods is also extremely high, because it simply adds up the values of these kinds of goods (one car, one loaf of bread and one watch). This is my point. At the same time, this is the last point which you have pointed out as incorrect in the previous email. The argument is thus led to: >> In essence, while the overall output may be limited in volume, the cumulative price is exceedingly substantial, resulting in an immense GDP. Should value be predicated on marginal utility, such a strange circumstance could manifest.

The principles are listed in the description of the video.

I use a thing called a light board. If you Google it, you'll find lots of great information on it.

I hope your exams went well. I hope the video helped.

Glad to help!

You're welcome!

Dr. Azevedo has a remarkable ability to explain intermediate economic concepts in a manner that is not only understandable for university students but also accessible to the general population. His approach makes economics feel like magic for everyone. I enjoy his lectures because I dont learn about economics only, I learn about human psychology and philosphy only because the way he teaches