One Reason Why Water Is Cheap Compared to Diamonds Is

question 50

Multiple Choice

One reason why water is cheap compared to diamonds is because the

• A) marginal utility of water is enormous.
• B) marginal utility of water is small.
• C) total utility of water is enormous.
• D) total utility of water is small.
• E) total utility of water and diamonds must be equal, but the marginal utility of water is much lower than the marginal utility of diamonds.

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Definitions:

Natural Monopoly

A market condition where a single firm can supply a product or service to an entire market at a lower cost than what two or more firms could achieve, often due to high fixed or barrier costs.

Compliance Costs

Expenses incurred by businesses and organizations in adhering to regulations, laws, guidelines, and standards, including the costs of implementing necessary changes.

Industrial Regulation

Involves government policies and rules aimed at regulating the activities and standards of specific industries to protect public interest.

Average Total Cost

The total cost of production divided by the quantity produced, representing the cost per unit of output.