Resolving Adam Smith’s diamond-water puzzle involves
A. realizing that price is not directly related to total utility.
B. knowing that at optimal purchase, price will tend to equal marginal utility.
C. knowing that, as increasing quantities of a good are consumed, marginal utility diminishes and, conversely, consuming a small quantity of a good produces high marginal utility.
D. All of the responses are correct.
Answer: D
You might also like to view...
Starting from long-run equilibrium, a large tax increase will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. recessionary; lower; potential B. expansionary; lower; potential C. expansionary; higher; potential D. recessionary; lower; lower
A tariff can best be described as
A. an excise tax on an imported good. B. an excise tax on an exported good. C. a government payment to domestic producers to enable them to sell competitively in world markets. D. a law that sets a limit on the amount of a good that can be imported.
In September 2008, the MONTHLY rate of inflation in Zimbabwe approached 489 BILLION percent. An inflation rate such as this would
A) be too high to calculate using the CPI. B) decrease the natural rate of unemployment. C) seriously disrupt normal commerce. D) all of the above.
U.S. tariffs on Canadian lumber have led to ________ production of lumber within the United States
A) the elimination of B) making illegal the C) an increase in D) a decrease in E) no change in