The reason that diamonds cost more than water is
A) the marginal utility of each diamond a consumer purchases is quite high due to the small amount of diamonds that most consumers purchase.
B) most consumers consume little water.
C) diamonds are more beautiful than water.
D) water is a necessity.
Answer: A
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If the price of a complementary good decreases, demand for the original good will decrease
Indicate whether the statement is true or false
If you are willing to purchase a house for $500,000 and you purchase the house for $500,000 . this transaction will generate: a. There is no surplus created for either of the party
b. $0 worth of seller surplus and unknown amount of buyer surplus. c. $0 worth of buyer surplus and unknown amount of seller surplus. d. No information provided.
To prevent shortages of cash during a crisis, the Fed: a. saves up cash in bank vaults around the country and the world. b. reduces liquidity in the economy so that more cash can be saved. c. sells U.S. government securities to commercial banks
d. demands interest payments on reserves held at the Fed. e. increases the discount rate.
Private goods are characterized by two important attributes. What are they?
a. marginality and depletability b. scalability and desirability c. repeatability and reliability d. depletability and excludability