Why is gold very expensive, even though it is not essential to life, while water, which is essential to life, is inexpensive?
Because there is a lower supply of gold it has a higher marginal utility, and hence the willingness to pay for the marginal unit is very high for most consumers. Water is relatively abundant, and hence its marginal utility is rather low, meaning that the willingness to pay for the marginal unit is low for most consumers.
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Suppose Bianca buys a used a textbook from Sebastian for $55. If Bianca's surplus from this transaction was $10, we can infer that:
A. Bianca's reservation price was $60, and Sebastian's reservation price was $50. B. Sebastian's reservation price was $45. C. Bianca's reservation price was $65. D. Bianca's reservation price was $45.
Refer to Figure 9.5.
If the bus companies can expect to bid for contracts every 6-12 months for new buses, then the outcome may shift to
A. GMB-Low, VolgaBus-Low. B. GMB-Low, VolgaBus-High. C. GMB-High, VolgaBus-High. D. GMB-High, VolgaBus-Low.
The graphic on family income distribution above
A) depicts a "static" view of income differences B) depicts a "dynamic" view of income differences C) depicts a "longitudinal" view of income differences D) depicts a view of income differences based on the "gini coefficient"
The table above shows the marginal costs and marginal benefits of college education. If the market for college education is perfectly competitive and unregulated, what is the price of college education?
A) $8,000 per year B) $12,000 per year C) $14,000 per year D) $16,000 per year