The diamond-water paradox occurs because:
A. the price of a product is related to its total utility, not its marginal utility.
B. the price of a product is related to its marginal utility, not its total utility.
C. water is, in fact, very scarce in certain regions of the world.
D. diamonds are more useful than water.
Answer: B
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A nation will export a good if its
A) no-trade, domestic price is less than the world price B) no-trade, domestic price is equal to the world price. C) no-trade, domestic price is greater than the world price. D) no-trade, domestic quantity is less than the world quantity. E) no-trade, domestic quantity is greater than the world quantity.
Lizzie's preferences are shown in the figure above. Which of the following combinations of goods does Lizzie prefer the most?
A) 6 comic books and 20 cookies B) 8 comic books and 8 cookies C) 12 comic books and 10 cookies D) 4 comic books and 12 cookies