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Divine Payment Option

December 16, 2011

Talk about giving new meaning to the invisible hand. Meet Curtis Masters, a plumber and a devout Christian who has a different business motto than others in his profession. You see Mr. Masters doesn’t charge a set price for his services. Instead, he is changing who controls the invisible hand  in Adam Smith’s famous phrase by letting God–not the market–set the pay for his services; Masters is giving his customers the option of paying what they can for the plumbing work he does for them.

This pay-as-you-can option certainly provides much needed relief to Mr. Masters’s customers, many of whom are facing difficult times and cannot afford to pay for the services of plumbers who do not follow this altruistic pricing method.

This good-faith type of payment option shows how Mr. Masters’s customers are given a chance to pay him based on what they perceive to be his marginal product of labor (MPL). Since quite a few of his customers are those facing financial problems, some are probably unable to pay him for what they believe is his true MPL; thus, Mr. Masters is being paid less than his MPL in some cases.

With so many people facing such tough times, it’s hard not to take advantage of his offer though. Then again, there are those who may take advantage of his generosity by purposely paying him below his MPL in order to save some money, even if they can afford to pay him for his labor and costs.

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One Comment leave one →
  1. ollie permalink
    December 18, 2011 6:22 pm

    price does not equal MPL, except in the neo-classical sense. More likely is, that he is now and has always been receiving less than his MPL, due to the fact that he has no price setting power. At least now he doesn’t have to feel shitty about it.

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