The Paradox of Value with Respect to Water and Diamonds

question 31

Multiple Choice

The paradox of value with respect to water and diamonds can be explained using consumer surplus because

• A) water is cheap but provides a large consumer surplus, while diamonds are expensive with a small consumer surplus.
• B) diamonds are in large supply relative to their demand, while water is scarce in supply relative to its demand.
• C) water is cheap but provides a small consumer surplus, while diamonds are expensive but provide a large consumer surplus.
• D) the total consumer surplus from diamonds is greater than the total consumer surplus from water.
• E) None of the above answers is correct.

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Definitions:

Nonprogrammed

Nonprogrammed decisions refer to responses made to situations that are unique, poorly defined and unstructured, and for which pre-specified processes are not applicable.

Role Ambiguity

A situation where an employee lacks clear understanding of their job duties, responsibilities, or expectations, leading to confusion and stress.

Overconfident

Having an excessively high opinion of one’s abilities, accuracy, or judgement.

Task Difficulty

The level of effort and skill required to successfully complete a task or assignment.