The diamond-water paradox arises because: the marginal utility of certain products increases, rather than diminishes. essential goods may be cheap while nonessential goods may be expensive. we sometimes fail to use money as a standard of value. essential goods are always higher priced than nonessential goods.

The diamond-water paradox arises because: the marginal utility of certain products increases, rather than diminishes. essential goods may be cheap while nonessential goods may be expensive. we sometimes fail to use money as a standard of value. essential goods are always higher priced than nonessential goods.

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter6: Consumer Choice Theory

Section: Chapter Questions

Problem 1SQ

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The diamond-water paradox arises because: Select One: a) Diamonds being scare and water being freely available the Marginal utility of Diamond rises on additional consumption and that of water falls b) the marginal utility of certain products diminishes rather than increasing c) we sometimes fail to use money as standard of value d) consumer goods are relatively scarce e) essential goods are always higher priced than nonessential goods
This module considers important concepts in economics: Total Utility, Marginal Utility, Diminishing Marginal Utility, and Utility Maximization within a budget constraint. These tools can be applied to personal decision making, particularly the consumption choices we make. Microeconomics often considers rational optimizing behavior by individuals, including consumers. Use the Law of Diminishing Marginal Utility to discuss why Market Demand has to have a downward slope. In other words, in order for consumers to demand a higher quantity of an item, its price must fall. Also use the Law of Diminishing Marginal Utility to explain why consumers often prefer to purchase a variety of goods and services (in other words, we are unlikely to fill a grocery cart with many units of the exact same product). Finally, use the utility optimizing condition that the ratio of Marginal Utility to Price for any good has to be the same across all goods to justify why it may be rational behavior to buy an…
44) A person is in equilibrium when marginal utility per dollar equals 1. False True 45) The budget line for large-ticket items will be affected by the prices of the two items, the income level, and the interest rates for borrowers. True False 46) Which statement is NOT a critique of utility theory? Not all decisions are made rationally. Utility is not measurable. Utility theory is limited to an analysis of individual demand behavior. People do not make mental calculations of satisfaction.
Inferior goods are affordable substitutes for more expensive goods. Which of the following is an example of someone purchasing an inferior good? Tom saved his money for an entire year so that he could buy the nicest car on the lot. Susan decided to buy her favorite pasta, rather than the store-brand pasta that she usually purchases. Sam had to stay within his budget, so he decided to buy generic toaster pastries instead of his favorite brand-name pastries. Jennifer earned a bonus at work, so she decided to go out to dinner at a fancy restaurant.
Q.1.14 Utility from consuming a good is understood by economists to mean; (a) how often we consume the good.(b) how much satisfaction or benefit we get from consuming the good.(c) how much it costs to buy the good.(d) how we best use the good. Q.1.15 The marginal utility of a good or service declines as one more unit is consumed because:(a) supply slopes upwards.(b) consumers are constrained by income. (c) of the law of diminishing marginal utility. (d) prices move with demand.
Suppose you have a budget of $200 to spend on two goods, X and Y. Good X costs $10 and provides a utility of 500 - 2q, where q is the amount consumed. Good Y costs $5 and provides a utility of 500 - 3q. What combination of consumption of these two goods will maximize your overall utility? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Question 9 Rational consumer behaviour is where a person consumes the amount of a good that maximises the total utility from the good. maximises the consumer surplus from the good. minimises the amount spent on the good to achieve a given level of utility. maximises the marginal utility from the good
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Economics If a consumer has a utility function of U = x + 2y, which statement is true? The MRSy→x = -1/2; x and y are perfect substitutes The MRSy→x = -2; x and y are perfect substitutes The MRSy→x = -1/2; x and y are perfect complements The MRSy→x = -1; x and y are perfect substitutes None of the above.
Which of the following statements is true? Total utility is the extra satisfaction from the consumption of a good or service. Marginal utility is the amount of satisfaction received from all the units of a good or service consumed. The law of diminishing marginal utility states that as more of a good or service is consumed total utility decreases. Consumer equilibrium is a combination of goods and services consumed which maximizes total utility from a given budget.
What is wrong with this statement? Demand refers to the willingness of buyers to purchase different quantities of a good at different prices during a specific time period.