The Paradox of Value Notes That

question 37

Multiple Choice

The paradox of value notes that:

• A)there is no rational explanation why people should set a high value on objects such as diamonds, which have little real usefulness.
• B)the price obtained from selling any commodity may bear little relationship to the cost of producing it.
• C)supply and demand curves do very little to explain how value (or price)is determined.
• D)no one consumer has any control over the price (or value)of a commodity, but consumers collectively do have such control.
• E)there is no consistent relationship between the total utility obtained from any commodity and the price charged for it.

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Definitions:

Long-Run Aggregate Supply

The total quantity of goods and services an economy can produce when resources are fully employed, assuming constant technology and factors of production.

Labor Force

The total number of people employed and unemployed, seeking employment in an economy.

Technology

The application of scientific knowledge for practical purposes, especially in industry, involving the development and use of technical means and their interrelation with life, society, and the environment.

Stock of Capital

The total quantity of physical assets used in the production of goods and services in an economy.