Does the fact that diamonds are so expensive imply that the demand curve for diamonds has a positive slope? Use marginal utility theory to answer the question
What will be an ideal response?
No. In order for the demand curve for diamonds to have a positive slope, the marginal utility of each diamond consumed would have to increase as more diamonds are consumed. Diamonds are no different than any other good. As more diamonds are consumed, the marginal utility of a diamond decreases. Therefore in order to increase the quantity of diamonds people demand, the price of diamonds must fall, which indicates a downward-sloping demand curve for diamonds.
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When planned aggregate expenditure is larger than real GDP, actual inventories ________ planned inventories and real GDP ________
A) are more than; decreases B) are more than; increases C) are less than; increases D) are not related to; increases E) are less than; decreases
In the figure above, the value on the y-axis decreases as we move from
A) point G to point A. B) point C to point A. C) point F to point A. D) point E to point A.