Savings and loan associations are not a financial intermediary

Joe and Rita each have some cookies and milk. Joe is willing to trade 2 cookies for an additional ounce of milk. Rita is willing to trade 4 cookies for an additional ounce of milk

If trading is possible, which of the following is most likely to occur? A) Joe will give some milk to Rita in exchange for cookies. B) Rita will give some milk to Joe in exchange for cookies. C) No trade will take place since they both prefer to have more milk and fewer cookies. D) There is not enough information to make any predictions.

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.