Contemporary Economics

Dear Professor Menger,

I strongly believe, we can both agree on the fact that factors of production are not the only determinants of price of a good. I would like to extend upon this thought and state that the cost of production determines supply and that supply determines utility. Importantly, the final degree of utility determines the core value. [1] The labor theory of value is a theory that has many gaps in accordance to value.

To my understanding of the book “The Principles of Economics” of your emphasis on satisfaction of need and the different degrees of importance, there are different needs of men assigned with different levels of satisfaction. The idea that ‘economizing men’, will first choose what is important to them for survival than something that is a higher degree of good improving the wellbeing of the man. [2] The example of food; as an individual consumes more food than is necessary for survival, he no longer will get the same pleasure to a point where an extra incremental unit of food will cause discomfort. This formulation of utility is interesting, however on my extension of Sir Bentham’s formulation, the value of pleasure and gain in “Theory of Political Economy” I stand upon intensity varying with time gives us a measure of rate of utility. Under the assumption that there is a feeling of pleasure and pain there are several circumstances on which it is possible to formulate a function for utility. Constructing a diagram with intensity of feeling on vertical axis and duration on the horizontal, with continuously varying intensity we find a relation that witch an increase in durance the level of intensity of pleasure decreases. Feeling is in the form of pain and pleasure. Pleasure is the positive effect of an ascending incremental change; pain on the other hand is the negative effect of change in the intensity/ duration diagram. A key circumstance to this theory suggested is remoteness, thus every level of intensity differs from each...