perart1

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You can apply that argument to pretty much any luxury goods item. It's worth what someone is prepared to pay. A billionaire will be able to pay more than a traffic warden.

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You can apply that argument to pretty much any luxury goods item. It's worth what someone is prepared to pay. A billionaire will be able to pay more than a traffic warden.

Or someone who fixes electron microscopes. :(

Ridiculous argument really.

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Can any amp justify that price tag when we all know the law of diminishing returns?

I think we all think we know the law of diminishing returns :)

The basic premise is that if one input in the production of a commodity is increased while all other inputs are held fixed, a point will eventually be reached which additions of the input yield progressively smaller, or diminishing, increases in output.

Now if we take one of the inputs as money, and the output as sound quality then sound quality may well continue increasing if you spend more money, assuming you spend it wisely. It's then a value judgement for the individual as to whether that increase is worth the extra outlay, given the other calls on their resources. It's not a fixed point in the way the optimum level for adding fertiliser to a field is.

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I think this is a classic example of a giffen good; an item that is attractive because the laws of economics don't apply: http://en.m.wikipedia.org/wiki/Giffen_good

or perhaps a Veblen good?

or neither?

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I think this is a classic example of a giffen good; an item that is attractive because the laws of economics don't apply: http://en.m.wikipedia.org/wiki/Giffen_good

or perhaps a Veblen good?

or neither?

Gotta be a Veblen good, surely. Giffen goods are, by definition, 'inferior' to other things of a similar general type which the consumer has been buying.

VB

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You've got to be careful with this stuff. It is actually the law of diminishing marginal returns :geek:. The level of return (or satisfaction) increases, but the rate of increase is decreasing (usually in consumption, but often in investment). Clearly the level of return should not diminish with investment, otherwise no rational individual would invest in a hi-fi.......erm hang on a moment.....:doh:

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