3. ELI5: How does the widely accepted notion of “the more you buy the cheaper it ...

ELI5: How does the widely accepted notion of “the more you buy the cheaper it becomes” actually work? Is it right to say that any given item therefore decreases in value when you have multiple of them?

Is it right to say that any given item therefore decreases in value when you have multiple of them?

Further to what others have said, the next item is indeed worth less to the buyer than the previous item.

Think about eating a delicious steak. The first bite is amazing because you were hungry and looking forward to it. The second bite is slightly less amazing because you are slightly less hungry. By the 20th bite, maybe you are full to bursting, so you could take it or leave it. Therefore, each additional bite is worth less to you than the previous one. Put in another context, each additional item is worth less to the buyer and should be priced to reflect that.

This is called the principle of diminishing marginal utility.

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