Asked by
Saone Trada
on Dec 12, 2024
Verified
People are willing to pay more for a diamond than for a bottle of water because
A) the marginal cost of producing an extra diamond far exceeds the marginal cost of producing an extra bottle of water.
B) the marginal benefit of an extra diamond far exceeds the marginal benefit of an extra bottle of water.
C) producers of diamonds have a much greater ability to manipulate diamond prices than producers of water have to manipulate water prices.
D) water prices are held artificially low by governments, since water is necessary for life.
Marginal Cost
The increase or decrease in the total cost of a production run for making one additional unit of an item.
Marginal Benefit
The additional satisfaction or utility gained by consuming an extra unit of a good or service.
Diamond
A naturally occurring gemstone composed of carbon, known for its hardness and brilliance, often used in jewelry.
- Comprehend the importance of marginal analysis in making economic decisions.
- Determine the elements that impact decisions and actions in economics.
Verified Answer
AE
Learning Objectives
- Comprehend the importance of marginal analysis in making economic decisions.
- Determine the elements that impact decisions and actions in economics.