People are willing to pay more for a diamond than for a bottle of water because
a. the marginal cost of producing an extra diamond far exceeds the marginal cost of producing an extra bottle of water.
b. the marginal benefit of an extra diamond far exceeds the marginal benefit of an extra bottle of water.
c. producers of diamonds have a much greater ability to manipulate diamond prices than producers of water have to manipulate water prices.
d. water prices are held artificially low by governments, since water is necessary for life.
B
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In the later part of the twentieth century, the price of crude oil began to increase after decades of relatively steady prices, which of the following could explain this phenomenon?
A) Worldwide reserves have been increasing. B) Worldwide demand has been increasing. C) Global warming D) Extraction technology has been degrading.
The problem associated with endangered populations of migratory birds is the
A) common property problem. B) free rider problem. C) deadweight loss problem. D) inefficient production problem.