Why would an ounce of gold be priced higher than an ounce of coffee beans, even though coffee is generally considered more essential than gold? Explain the paradox in terms of marginal and total utility
Please provide the best answer for the statement.
The basic reason is that the gold is relatively scarce, and it has a high price. Coffee is relatively abundant, and has a low price. The utility-maximizing rule indicates that consumers should continue purchasing any product until the ratio of its marginal utility to its price is equal to that for all other products. Gold must have a high marginal utility and price, while coffee must have a low marginal utility and price for consumers to maximize utility. Consumers, however, generally purchase only small quantities of gold because of the high price, and large quantities of coffee because of the low price. Coffee is considered to be more essential than gold, even though its price is lower, because the total utility from consuming coffee (sum of the marginal utilities) is much greater than the total utility from consuming gold.
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Determinants of income differences include all of the following EXCEPT
A. moral hazard. B. marginal productivity. C. discrimination. D. age.
Which of the following is a source of economic growth?
A. more resources B. active economic policies C. technology D. both A and C
An order from an exchange for a seller to add enough funds to meet the minimum balance in a margin account is called:
A) maintenance margin B) margin option C) margin call D) margin put