(a) Explain the law of diminishing marginal utility with the aid of a numerical example. Make sure in your answer you include a diagram showing both total utility and marginal utility. (b) Explain with the help of marginal utility theory why it is that in equilibrium diamonds will have a high price and water a low price.
(a) Explain the law of diminishing marginal utility with the aid of a numerical example. Make sure in your answer you include a diagram showing both total utility and marginal utility. (b) Explain with the help of marginal utility theory why it is that in equilibrium diamonds will have a high price and water a low price.
Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter6: Consumer Choice And Demand
Section: Chapter Questions
Problem 2QFR
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Transcribed Image Text:(a) Explain the law of diminishing marginal utility with the aid of a numerical example. Make
sure in your answer you include a diagram showing both total utility and marginal utility.
(b) Explain with the help of marginal utility theory why it is that in equilibrium diamonds will
have a high price and water a low price.
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