Earlier quoted context omitted.
The bit about "coffee" and "$5" and "less than" and "marginal utility" have to do with the value of $5 to the average Starbucks customer reading things on the Internet, and nothing at all to do with the nature of coffee other than that coffee is not Important to people's lives. The point of the comparison is that coffee means so little to people that the cost of a cup of coffee is a good proxy for "how much you shoul…
Why not price the coffee at $30 then for millionaires? Surely the marginal utility of $30 to them would be similar to that of $5 to someone earning $60k? Why would one pay $5 for the same amount of gas one month and $3 in another month when the marginal utility derived from the purchase of gas is precisely the same? Ignoring the price effects induced by the supply/demand characteristics and intrinsic nature of the go…
That happens all the time, including for coffee.
Coffee at a "high end" hotel / coffee shop etc does not cost the same as coffee at your local coffee joint --while the coffee itself has marginal difference. And there are places that sell $30 hamburgers (even $1000 hamburgers).
Same for brand name clothing etc compared to lesser known or bargain brands. The cloth / manufacturing quality in tons of cases is exactly the same, to the point of both being made in the same factory in China.