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Consider the comparison of two new cars. One costs \$250k and the other \$25k. One would naturally expect the quality (value) of the \$250k car to be greater than the \$25k car but does economics have a method to compute the likely increase in perceived value?

I would think it would be two ... a logarithmic relationship between \$250k and \$25k ... and not ten ... a linear relationship.

In casual observation this would seem to hold true for most other commodities ... car, guitar, home, etc. Are there products which actually could be 10 times, or greater value for double the cost?

Is there an economic law that states there is typically a logarithmic relationship between price and value?

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  • $\begingroup$ Which theory of value do you have in mind here? And is your "cost" referring to cost to the consumer or the production cost? $\endgroup$ – Fizz May 6 at 12:49
  • $\begingroup$ Thank you. I didn't know that existed. $\endgroup$ – Randy Zeitman May 6 at 17:45

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