The Diamond-Water Paradox Explains Why

question 14

Multiple Choice

The diamond-water paradox explains why

• A) water,which is essential to life,is inexpensive,whereas diamonds,which do not sustain life,are expensive.
• B) water,which is essential to life,is expensive,whereas diamonds,which do not sustain life,are inexpensive.
• C) the demand for diamonds,which do not sustain life,is greater than the demand for water,which is essential to life.
• D) the total utility in society for diamonds,which do not sustain life,is greater than the total utility in society for water,which is essential to life.
• E) diamonds and water are usually purchased in separate transactions.

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Definitions:

Bacon and Eggs

A popular breakfast dish in various cultures consisting of fried bacon and eggs.

Cross-Price Elasticity

A measure used in economics to show how the quantity demanded of one good changes in response to a change in the price of another good.

Inferior Goods

Goods for which demand decreases as the income of the consumer increases, opposite to normal goods.

Normal Goods

Goods for which demand increases as consumers' income increases, holding all other factors constant.