The Price of Diamonds Is Substantially Greater Than the Price

question 21

Multiple Choice

The price of diamonds is substantially greater than the price of water because

• A)the total utility of water is greater than the total utility of diamonds.
• B)the total utility of diamonds is greater than the total utility of water.
• C)the marginal utility of the last diamond purchased is significantly greater than the marginal utility of the last gallon of water purchased by a typical person.
• D)the marginal utility of the last diamond purchased is significantly less than the marginal utility of the last gallon of water purchased by a typical person.

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Definitions:

Cash Flow

The total amount of money being transferred into and out of a business, affecting the company's liquidity.

Investment Activities

Financial actions related to the acquisition and disposal of long-term assets and other investments not considered cash equivalents.

Net Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term financial health and operational efficiency of the company.

Total Debt Ratio

A financial metric that compares a company's total debt to its total assets, indicating the degree of leverage and financial risk.