Why does gold, which is a relatively nonessential item, have a higher price than water, which is essential to life?
What will be an ideal response?
Gold has a high price and a high marginal utility, while water has a low price and a low marginal utility. Water is relatively abundant in supply, while gold is relatively scarce. Hence people consume a lot of water and only a little gold. As a result, the marginal utility of water is low and the marginal utility of gold is high. The utility maximizing rule, that the marginal utility per dollar on gold must equal that of water, in combination with the high marginal utility of gold and low marginal utility of water, implies that the price of gold must be higher than that of water.
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Darnell can work on an oil rig, where the probability of being killed in a work-related accident is 4/6,000, or he can earn work as a lumberjack, where the probability of being killed in a work-related accident is 1/6,000
Using the compensating differential approach, the value of Darnell's life is $6 million. How much more per year will working on an oil rig pay than working as a lumberjack? A) $2,000 B) $3,000 C) $4,000 D) $6,000
A monopolistically competitive firm
A) cannot make a positive economic profit in the long run because of entry. B) can make a positive economic profit in the long run because it sells a differentiated good. C) can make a positive economic profit in the long run because there are only a few firms in the industry. D) cannot make a positive economic profit in the long run because it sells a homogeneous good.
In general, the larger the price elasticity:
a. the smaller the responsiveness of price to changes in quantity. b. the smaller the responsiveness of quantity to changes in price. c. the larger the responsiveness of price to changes in quantity. d. the larger the responsiveness of quantity to changes in price.
Find the size of the civilian labor force from the following data: frictional unemployment = 150, structural unemployment = 200, cyclical unemployment = 225, discouraged workers = 25, underemployed workers = 75, fully employed workers = 850, total population = 2,000
a. 1,425 b. 1,450 c. 1,500 d. 1,525 e. 2,000