form6 economic questions, plx help!

Air can satisfy human wants, so air is a good (since some is preferred to none of air). However, its quantity is more than enough to satisfy all the quantities demanded for it at zero opportunity cost (price). So no one is willing to pay a cost for more of it. Thus marginal use value is zero. However, its total use value is positive, which is equal to the area under the demand schedule.

Utility is just an arbitrary assignment of numbers to rank options. Free good can have an utility number assigned to it to show its priority in his preference ordering. The number can be positive, zero, or negative, basically any number will do. By convention, economic good has an utility number greater than that of free good and a bad has utility smaller than that of free good, which is in proper preference ordering.

2008-09-18 00:30:31 補充：
Response :
An entity has utility assigned NOT because it has positive use value and can satisfy wants. Even if it has zero or negative 'value' (eg in neuter/bad), one can always assign arbitrarily an utility number to rank its preference (eg a number smaller than that of a good for example).

2008-09-18 00:31:47 補充：
In my answer, "So no one is willing to pay a cost for more of it". The word "MORE" implies that P=MUV at consumption equilibrium.

first, why free good is a good that has zero marginal use value?
for example, air is free good, when i breathe, these air can make me satisfiable, that why i think the MUV is more than zero, is that right?
ANS:
free good has zero price. At equilibrium, P = MUV. Then, P = MUV = 0.

free good has its use value. but this is the total value. Remember the figure of MUV curve (downward sloping), if we consume water with more than 0 quantity until MUV = P = 0, the area under the MUV curve represents TUV. this area must be greater than zero, representing the positie use value for water.


second, does free good have utility?
similar to the first question,but these are what i don't understand with it
ANS:
utility is a set of number arbitrarily assigned so as to rank options.
Water has positive use value, can satisfy wants. So, this is a "good", having utility.

如果同學想知多D econ的溫習資料, 可以EMAIL給我; [email protected]
另外, 最近有個免費講座也可能適合您去聽, 講返econ的讀書策略及簡述考試內容; 詳情可看http://hk.myblog.yahoo.com/leoleekh

Leo sir
http://hk.myblog.yahoo.com/leoleekh