An O. Henry short story tells about a young married couple, quite poor, facing Christmas without the means to buy each other gifts. So without her knowing, he sells his watch tobuy a comb for her lovely hair and at the same time without him knowing, she cuts her lovely hair and sells it to buy a fob for his watch. To an economist, this touching storytells us
A) that without complete and open information, utility cannot be maximized
B) total utility is not always greater than marginal utility
C) the law of diminishing marginal utility does not apply in all cases
D) the marginal utility of the comb for her was greater than the marginal utility of his watch and for him, the marginal utility of the fob was less than the marginal utility of the comb
E) the marginal utility of the comb for him was greater than the marginal utility of his watch and for her, the marginal utility of her hair was less than the marginal utility of the fob
Correct Answer:
Verified
Q80: There are few laws in economics. One
Q81: If Cliff Althoff attends an antique auction,
Q82: In economics, interpersonal comparisons of utility
A) are
Q83: To economists, the term utility refers to
Q84: In most places of the world, the
Q86: Marginal utility is defined as the
A) extra
Q87: A utility-maximizing consumer would not consume more
Q88: The water-diamond paradox discussed in the text
Q89: Consumer surplus is created when
A) a person
Q90: Which of the following statements could be
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents