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

question 77

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

---

Definitions:

Perfectly Price Inelastic

A market situation where the quantity demanded of a good does not change in response to changes in its price.

Total Income

The sum of all earnings obtained from work, investments, and other sources before any taxes or deductions.

Perfectly Price Elastic

Describes a situation where the quantity demanded or supplied changes infinitely in response to any change in price.

Luxury Good

A high-end item that is not necessary for living but is deemed as highly desirable within a culture or society.