An economists love letter :) My Dear Engel (Curve), It has been almost one year that we know each other. I still remember how I suddenly fell in love with you like highly inelastic demand curve. When first time, you looked into my eyes, I knew it was real (not nominal) but due to different market forces operating then, I could not share the theory of my needs and wants with you. I understand that my love for you may be seen by you as short-run, but trust me – I am a rational guy and will make all the necessary efforts to push our relationship towards a long-run equilibrium. I also know that your friends do not like me so much and have been constant entry barriers for you to admit your love for me. I always feel that when I’ll be with you, I will be needing more and more of you thereby negating the law of diminishing marginal utility. I am currently facing budget constraints however I’m working very hard on my production possibility frontier to ensure that there is always a consumer surplus for your demands. I will always try to keep your life in Stage I of production cycle – Increasing returns. You may be thinking all these as my assumptions and there may be a lot of substitutes available for you. Though, there is no scarcity of options of guys to choose from for marriage and I may just be an inferior good to you, I strongly believe that I have comparative advantage over everyone else because the supply curve of my love for you is perfectly elastic (horizontal) showing infinity and hence the rate of change/slope is zero. It must be a trade-off situation for you and your opportunity cost of choosing me could be very high. But my heart always says – Higher the risk, higher is the return!! I understand that you might also be afraid of your parents and my parents. Yes, they will make situation non-conducive for our progressive growth. They may also form a cartel and use game-theory to create disequilibrium in our love. But you need not worry about such parameters. All you need to do is just take a step towards me and I will take care of everything. I will remove the externalities of the people around you. Together we can live a very optimal life. My MPS – Marginal Propensity to save will keep rising to ensure that your MPC – Marginal Propensity to consume does not have to compromise. If my income effect is not so strong, I will resort to tax evasion and even windfall gains but will always ensure to fulfill all your wishes even the ones arising out of demonstration effect. I have already spoken to Ricardo Uncle and he has agreed to give us a small house at a very economical rent. We will earn and save in gold and foreign exchange depending upon the prevailing market conditions and monetary policies. For other household items, I will ensure optimum utilization of resources. We will follow the process-based division of labor whereby I will do the cooking and you will do the eating, I will clean the house and you will watch your movies and TV shows. I will be a complimentary good for you (unusable if you are not there). I will give you all rights to exercise your monopoly over me. I will always be by your side, during boom, recession and depression. I will save you from all rival forces; I promise that my tastes and preferences will never change in future and together we will dream “perfect competition” (where slope/rate of change in love will be zero) under which our demands and supplies of love will coincide and take our love to infinity level. I also want to state the hypothesis that when we start utility maximization of our love, and perform efficiently, soon we will be blessed with gift (baby girl) from God as a consequence of multiplier effect. This new entry will be a perfect model who will maximize our satisfaction to the fullest level. Though, there is a possibility that once, our kid comes to life, the supply curve of my love shifts a little towards her. However probability of high MRS (marginal rate of substitution) is low. But trust me; It will still be a rectangular hyperbola (so that even if it becomes low at times, it will never reach zero). At a micro-level, I just love you deeply and at a macro-level – you mean the world to me!! All I want from you is to just love me and give me a chance to fulfill our dream before the new government imposes love-tax or some other micro-economic or macro economic conditions that make our togetherness difficult ahead.
Posted on: Sat, 27 Sep 2014 16:12:21 +0000
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