Does the fact that diamonds are so expensive imply that the demand curve for diamonds has a positive slope? Use marginal utility theory to answer the question
What will be an ideal response?
No. In order for the demand curve for diamonds to have a positive slope, the marginal utility of each diamond consumed would have to increase as more diamonds are consumed. Diamonds are no different than any other good. As more diamonds are consumed, the marginal utility of a diamond decreases. Therefore in order to increase the quantity of diamonds people demand, the price of diamonds must fall, which indicates a downward-sloping demand curve for diamonds.
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The expected inflation rate is equal to the actual inflation rate. According to the (Friedman) natural rate theory, the economy is
A) in a recessionary gap. B) in an inflationary gap. C) at a point on the short-run Phillips curve, but not on the long-run Phillips curve. D) biased toward producing a higher percentage of services than goods. E) producing Natural Real GDP.
When real interest rates in the United States rise relative to real interest rates in Japan, what is the impact on the U.S. price level? Explain your answer using AD-SRAS analysis
Which of the following approaches will help traditional American companies operating in countries like China to protect intellectual property rights?
A. avoiding negotiation and alternative dispute resolution B. complaining to the U.S. government and World Trade Organization C. expecting the home country to actively police their intellectual property D. using IP without registering it with the appropriate agencies in United States E. not engaging local representation
If the consumer gets 40 utils from consuming four CDs, 45 utils from consuming five CDs, and 48 utils from consuming six CDs, then the consumer's marginal utility is:
A. increasing. B. decreasing. C. constant. D. increasing at an increasing rate.