What is the water and diamonds paradox of value and what is its resolution?
What will be an ideal response?
The paradox is that water is critical to life—has high total utility—but sells for a low price. Diamonds, in contrast, are nonessential—have low total utility—but sell for a high price. The paradox is resolved by realizing that the price we are willing to pay is linked to the marginal utility from the next glass of water or diamond, not the total utility of all units of each previously obtained. We already have much water, so the marginal utility of the next water is low. But most people have few diamonds, so the marginal utility of the next diamond is high.
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Someone who turns down an opportunity to purchase a Bible for $5 and then immediately pays $5 to attend a movie thereby expects to obtain more satisfaction from seeing the movie than from
A) cultivating the spiritual life. B) deepening his religious faith. C) owning the Bible just offered to him. D) reading the Bible.
A large and sudden currency depreciation is widely known as:
a. a managed float. b. a crawling peg. c. an exchange rate or currency crisis. d. a free float.
Forcing a natural monopoly to charge P = MC will not work
Indicate whether the statement is true or false
Refer to the data provided in Table 10.3 below to answer the following question(s).
Table 10.3 
Refer to Table 10.3. Marginal revenue product of the ________ worker is $480.
A. second B. third C. fourth D. fifth