The water and diamonds paradox of value
A) is that water is essential for life and yet is cheap, whereas diamonds are totally nonessential and yet are expensive.
B) points out that we generally have a low total utility of water and a high total utility of diamonds.
C) is resolved by the principle that market price is determined by total utility, not marginal utility.
D) none of the above
A
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You hear that the price of gasoline will fall 20 cents overnight. This will tend to
A) increase your demand today. B) decrease your demand tomorrow. C) increase your demand tomorrow. D) leave your demand unchanged both today and tomorrow, especially if it is highly elastic to changes in prices.
Refer to Figure 7-14 Which supply curve represents perfectly inelastic supply?
a.S1
b.S2
c.S3
d. It is impossible to tell without more information.