An Economist Explains (September 2010)

An Economist ExplainsMaximizing utility with marginal advice

Dear EE,

No matter what ratio of donuts to coffee I offer him, I just can’t seem to get my husband off of the same indifference curve. Has our marriage gotten stale?


Dear Constrained,

The only thing getting stale is that bundle of donuts! The problem is not the increasingly greater number of donuts per cup fewer of coffee you’re buying. What your husband wants is more of everything. Do you have a Costco membership?


Dear EE,

I got a great deal on an efficiency apartment in DuPont Circle, but I’m on a student budget and utility isn’t included. The neighbors play their stereo on full volume all night and the landlord won’t fix my refrigerator. Will I have to reduce my consumption? -Feeling Good But Inferior

Dear FGBI,

It sounds like you’re really at the maximum point on your pissed off possibilities frontier. Although your situation is awful, I’m afraid that you chose it, so it must therefore be your optimum.


Dear EE,

I am the proprietor of a small business specializing in Swedish poodle paw massage. Even though I am much better at massaging poodles than tutoring illiterate squirrels, sales are so low that I think I would be better off massaging my own poodles and tutoring my own squirrels.

-D. Nye-Ricardo

Dear D. Nye,

Don’t be ridiculous. Somewhere out there in the Golden Triangle is someone who runs a squirrel tutoring shop and would be ecstatic to tutor your squirrels if you will provide Swedish massage for their poodles. Even if you could massage more poodles or tutor more squirrels overall on your own, more poodles can be massaged and more squirrels tutored in aggregate if you run your poodle massage boutique and take your squirrels across town for tutoring.


Dear EE,

I borrowed $116,000 to pay for graduate school and then tried to pay it back with Monopoly money I photocopied in the library. Now I can’t get nearly as many florins for my guilders as I used to. Help!

-Deflated But Not Worthless

Dear DBNW,

What you need is structural readjustment and fiscal austerity. Psych!

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