Net value function

See slides

What is economics?

Relocation of resources

everything has a cost

Cost-benefit analysis Jules Dupuit See Economics evolving: a history of economic thought by Agnar Sandmo

Net Value functions

$$\text{Net value = [Benefit] - [Cost]}$$

• relativity
• perspective: ${\text{(Benefit - Cost)}}_{\text{client}}$

$${\text{Benefits}}_{\text{client}}>\text{Sale Price}>{\text{Cost}}_{\text{producer}}$$ $$\text{System Net Value =}{\text{Benefits}}_{\text{client}}-{\text{Cost}}_{\text{producer}}$$ $$\text{NVF = Benefits - Cost of space - Cost of time - ...}$$

Unit matching and conversion

marginal value, quantity-dependent value

marginal net value of buying an apple is the change in NV from buying one more apple (slope of NVF wrt number of apple bought) either subsequent items gives more NV or lower costs.