Question
Prior to beginning work on this discussion, read Farah Mohammeds article, Why Are Diamonds More Expensive Than Water? (Links to an external site.), as well
Prior to beginning work on this discussion, read Farah Mohammed’s article, Why Are Diamonds More Expensive Than Water? (Links to an external site.), as well as Chapter 5 in your textbook, especially Sections 5.1 and 5.3, and respond to the following:
Describe the relationship between total utility and marginal utility.
Explain if marginal utility can be negative.
Examine the diamond-water paradox. Why are diamonds more expensive than water?
Evaluate the law of diminishing marginal utility.
Identify some items, explaining your reasoning, that do not follow the law of diminishing marginal utility.
Evaluate how the law of diminishing marginal utility can explain the diamond-water paradox.
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Answer 1Consumers purchase commodities that offer them satisfaction The value that people derive from various goods is utility People can pay any price when they have a need to satisfy and in most cas...Get Instant Access to Expert-Tailored Solutions
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