Kevin Allocates His Budget According to Rules of Utility Maximization

question 179

Essay

Kevin allocates his budget according to rules of utility maximization.What are the rules of utility maximization and how do they explain the paradox of value,which is that diamonds are expensive but useless,while water is inexpensive but essential?

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Definitions:

Sigmund Freud

An Austrian neurologist and the founder of psychoanalysis, a method for treating psychopathology through dialogue between a patient and a psychoanalyst.

Prefrontal Lobotomy

A surgical procedure once used to treat mental disorders, involving the removal or severing of connections in the brain's prefrontal lobe.

Graduated Exposure

A therapeutic technique used to treat phobias and anxiety disorders, involving gradual exposure to the feared object or context without any danger, to help overcome the fear.

Systematic Desensitization

A behavioral therapy technique used to reduce phobic responses or anxiety through gradual exposure to the feared object or situation, combined with relaxation exercises.