Diamond Water Paradox PDF

Preview

Summary

This assignment went over the Diamond Water Paradox...

Description

Shaniyah Thompson April 1, 2020, Microeconomics 2020-004 Diamond Water Paradox

1. The theory Adam was using the theory of value. The theory of value is saying that the value of the product comes from the importance of human satisfaction. The reason why Adam was not able to solve the diamond water paradox was that both valued and less valued satisfied the human because both were a need and want. 2. Modern economists have solved the diamond paradox by applying the marginal-utility theory of value. The reason why the theory of value resolves the paradox is because the theory says if there is an excess of the good there will be a high price because everyone has access to it. On the other hand, if the good is scarce it's going to have high value because it is not enough for everyone. Only those who really want it and have the money for it will have it. 3. The difference between marginal utility and total utility is that marginal utility is the satisfaction that a consumer gets from purchasing a second good or service. The definition of total utility is a consumer purchasing multiple units of a good or service and having immense satisfaction from it. 4. An example of marginal utility is a consumer purchasing 2 pairs of sneakers. The person is satisfied with a pair of sneakers but the purchase of another pair increased the consumer's satisfaction. An example of total utility is a person purchasing multiple stocks because the consumer is not only investing in multiple stocks they are investing in their satisfaction from it....