The Paradox of Value Between Diamonds and Water Is Explained

question 71

Multiple Choice

The paradox of value between diamonds and water is explained by the fact that the

• A) total utility of diamonds exceeds the total utility of water.
• B) marginal utility of diamonds exceeds the marginal utility of water.
• C) total utility of diamonds exceeds the marginal utility of water.
• D) marginal utility of diamonds exceeds the total utility of water.

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Definitions:

Total Utility

The total satisfaction or benefit a consumer receives from consuming a given total quantity of a good or service.

Satisfaction Levels

A measure of how goods or services meet or surpass customers' expectations.

Indifference Curve

A graph that shows a combination of two goods that give a consumer equal satisfaction and utility, representing their preferences.

Equal Satisfaction

A principle in consumer choice theory that suggests consumers allocate their resources to maximize satisfaction or utility.