If water is essential for life, while diamonds are not, then why is water cheaper than diamonds?
A. Because the marginal utility of water is high but the total utility is low.
B. Because the total utility generated by diamonds is larger than the total utility generated by water.
C. Because most people do not understand their total need for water.
D. Because water is abundant, the marginal utility of water is low, and price reflects marginal utility, not total utility.
Answer: D
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Countries that use the euro as their currency face similar concerns as countries did during the years of the gold standard in that each are (were)
A) using a floating currency. B) unable to conduct fiscal policy. C) unable to conduct monetary policy. D) using currency which is backed by gold.
Which of the following is an advantage of a sole proprietorship?
a. the ability to pool resources b. limited liability c. double tax exemption of the firm's earnings d. ease of organization e. ease of raising funds