Have you ever gone to an auction? You see people bidding against each other for a good, such as an oil painting. As the bidding price inches upward, people drop out of the bidding process. Why? Because for the people dropping out, the

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As the price of the good increases during an auction, the marginal utility per dollar spent on that good decreases compared to the marginal utility per dollar spent on other goods. This means that the value or satisfaction gained from each additional dollar spent on the good becomes less than what could be obtained by spending that dollar on something else, leading bidders to drop out.

Have You Ever Gone to an Auction? You See People