People are willing to pay more for a diamond than for a bottle of water because
a. the marginal cost of producing an extra diamond far exceeds the marginal cost of producing an extra bottle of water.
b. the marginal benefit of an extra diamond far exceeds the marginal benefit of an extra bottle of water.
c. producers of diamonds have a much greater ability to manipulate diamond prices than producers of water have to manipulate water prices.
d. water prices are held artificially low by governments, since water is necessary for life.
b
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If all resources were perfectly adaptable for alternative uses, the production possibilities curve would
A) be bowed out. B) be bowed in. C) be a straight line. D) not exist.
Which of the following statements is false?
A) Activists are more likely to advocate fine-tuning the economy than nonactivists. B) Activists believe that monetary and fiscal policies can be and should be deliberately used to smooth out the business cycle. C) Nonactivists believe that monetary and fiscal policies cannot and should not be deliberately used to (try to) smooth out the business cycle. D) Nonactivists favor rules-based monetary policy. E) none of the above
Which of the following is not included in aggregate demand?
What will be an ideal response?
The formula for an infinite sum is:
A. 1 + b + b2 + b3 + b4 + ... = 1 / b. B. 1 + b + b2 + b3 + b4 + ... = 1 / (1 + b). C. 1 + b + b2 + b3 + b4 + ... = 1 / (1 - b). D. 1 + b + b2 + b3 + b4 + ... = b / (1 - b).