Resolving Adam Smith's Diamond-Water Puzzle Involves

question 145

Multiple Choice

Resolving Adam Smith's diamond-water puzzle involves

• A)realizing that price is not directly related to total utility.
• B)knowing that at optimal purchase, price will tend to equal marginal utility.
• C)knowing that, as increasing quantities of a good are consumed, marginal utility diminishes and, conversely, consuming a small quantity of a good produces high marginal utility.
• D)All of the responses are correct.

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