Rich man poor man situation in economy?

Question

why could you say that A, who is a millionaire, get less marginal utility from a second piece of cheese cake than from the first piece, but you COULDN'T SAY WHETHER HE GOT MORE OR LESS MARGINAL UTILITY FROM A SECOND PIECE OF CHEESE CAKE THAN B, who has a very low income?

Please help me on the part with Caps on, I don't quite understand how to explain this properly.

Thanks

Answer 1

The marginal utility of specific goods (like cheesecake, for example) can be independant of wealth.  Put simply, all marginal utility refers to is the amount of subjective "benefit" (pleasure, satisfaction, etc.) that a SPECIFIC INDIVIDUAL derives from ONE ADDITIONAL UNIT of whatever good you're measuring.

I'm a dirt poor college student and I can tell you that my own marginal utility for a second piece of cheesecake would be very low...probably even negative.  In other words, I would enjoy that second piece very little, and would probably even find eating it to be an unpleasant experience.  (Cheesecake is way too dense for me to eat a lot of it.)  However, another person (of any income bracket) might have a different tolerance for rich foods than mine, and might enjoy a second piece of cheesecake almost as much as the first, receiving greater marginal utility than me for that second piece.

This phenomenon all depends on individual tastes, and is probably largely independant of income.