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The concept of Diminishing Marginal Utility (DMU) can be used by small businesses in various ways. Firstly, it can guide pricing strategies. If a product's marginal utility decreases as more of it is consumed, the business might lower prices to encourage more purchases. Secondly, DMU can inform product diversification. If consumers get less satisfaction from consuming more of the same product, introducing new products can maintain or increase overall utility. Lastly, understanding DMU can help in customer retention. By offering a variety of products or services, businesses can ensure customers continue to derive satisfaction and remain loyal.
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Experts like Nobel Prize in Economic Sciences Laureate Peter Diamond, in collaboration with Emmanuel Saez, have estimated the optimal tax rate to be 73%. These rates are based on Diminishing Marginal Utility, the idea that a dollar is worth less to those with very high incomes compared to those with far lower incomes. Therefore, a policy that makes the rich a bit poorer will impact very few people and will barely affect their life satisfaction. The optimal tax rate on people with very high incomes is the rate that raises the maximum possible revenue while still preserving the incentive to generate wealth.
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“Zombie ideas” simply refuse to die despite mountains of evidence to disprove them. How do you fight them? Paul Krugman, Nobel Prize winner in Economi...
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