A Consumer Allocates His Budget According to Rules of Utility

question 189

Essay

A consumer allocates his budget according to rules of utility maximization. What are the rules of utility maximization and how do they explain the paradox of value, which is that diamonds are expensive but useless, while water is inexpensive but essential?

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Definitions:

Judgments

The ability to make considered decisions or come to sensible conclusions.

Stakeholders

Stakeholders are individuals or groups with an interest or stake in a project, company, or outcome, and can be affected by its performance.

HR Manager

A professional responsible for overseeing the human resources department of an organization, including recruitment, training, and employee relations.

Instrumental Value

The worth or usefulness of something as a means to achieving an end or goal.