Explain the paradox of value
What will be an ideal response?
The paradox of value questions why water, which is essential for life, costs less than diamonds, which are not. This puzzle can be resolved by realizing the difference between marginal utility and total utility. Water has high total utility, but because we consume so much water, the last unit has little value, that is, the water has low marginal utility. Diamonds have little total utility, but because we consume few diamonds, the last unit of diamonds has high marginal utility.
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PSD areas
a. must meet the same standards as do nonattainment areas b. face standards that are necessarily set at an efficient level c. are regions that meet or exceed national ambient air quality standards d. are likely associated with higher MSC than that of nonattainment areas
Which of the following items is not a factor of production?
A. An oil rig in the Gulf of Mexico B. A ski jump in Utah C. A bank loan to a farmer D. An orange grove in Florida
The political problems associated with fixing the CPI are that
A. Social Security taxes would rise. B. Social Security benefits would rise. C. personal income taxes would fall. D. benefits to the poor would fall.
Assume that the full-employment level of output is $1,000 and the price level associated with full-employment output is 100. Also assume that the economy's current level of output is $1,100 and at the price level of 100 current aggregate demand is $1,200. If the government wants to move the economy back to the full-employment level of output and the MPC is 0.8, then it should increase taxes by
A. $100. B. $25. C. $50. D. $200.