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of customers is interested in each of the models. Under such circumstances no way exists to relate the value of Y to that of X since no individual exists on whose value scale both X and Y are hierarchically ordered.

The idea of utility as existing on the margin constitutes an immense contribution of the Austrian School to economic thought. Carl Menger, the intellectual progenitor of Austrian Economics, originated the insight that economic actors do not choose between whole available stockpiles of goods. Instead, they choose between individual units of different goods when their resources are insufficiently abundant to enable them to acquire every unit in question. Menger used the idea of marginal utility to address a paradox that had boggled Classical economists in the tradition of Adam Smith, the question of why a diamond is more highly priced on the market than water despite water's crucial function in survival which diamonds lack. According to Menger, one does not choose between the entirety of the world's water and the entirety of its diamonds. Instead, one chooses between a particular unit of water and a particular diamond. While water in general is far more valuable to survival than diamonds, economic actors will typically prefer a single diamond to a single unit of water since its marginal utility outweighs that of the unit of water.

A corollary of Menger's insight is the law of diminishing marginal utility. An individual's value hierarchy is demonstrated through his actions. It follows that he will devote his foremost action with regard to a given good to what he considers the most important use for that good. Thus, the first unit of any good is necessarily allocated to the actor's most important available objective. The second unit of the good must, then, be allocated to the second most important objective. By definition, the second most important objective is less valued by the actor than the first. The same can be said for all subsequent allocations of units of that good with respect to prior allocations, the latter of which must necessarily be more valuable. Thus, each subsequent unit of a good will provide a lower marginal utility to the acting man than each prior unit of that good.

The law of diminishing marginal utility allows Austrian economists to dispose of the aforementioned water-diamond paradox. Since water is available in large quantities, most economic actors have enough units of it to devote to the basic uses of water, including survival,

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