Implicit in the Solution to the Diamond-Water Paradox Is the Idea

question 22

Multiple Choice

Implicit in the solution to the diamond-water paradox is the idea that prices reflect __________ utility instead of __________ utility.

• A)marginal; total
• B)total; marginal
• C)average; total
• D)total; average
• E)none of the above

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Definitions:

Shortage

Occurs when the quantity demanded of a good exceeds its supply at a given price, leading to an unmet demand in the market.

Quantity Supplied

The total amount of a product or service that producers are willing and able to sell at a given price over a specified period.

Equilibrium Price

is the price at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers, resulting in market balance.

Quantity Supplied

Suppliers' readiness and capability to sell a certain amount of goods or services at a specified price.