Ben spends $50 a year on 2 bunches of flowers and $50 a year on 10,000 litres of tap water.Ben is maximizing utility.His marginal utility from water is 0.5 units per litre.
________ more valuable to Ben than ________.
Ben's expenditure on flowers and water illustrates the paradox of value because Ben's marginal utility from flowers is ________ than his marginal utility from water and his total utility from flowers is ________ than his total utility from water.
A)Water is;flowers;greater;less
B)Water is;flowers;less;greater
C)Flowers are;water;greater;less
D)Flowers are;water;less;greater
E)None of the above because Ben values flowers and water equally

Question

Quizplus · Accepted Answer

Ben's marginal utility from water is 0.5 units per litre, which means that he gets 0.5 units of satisfaction from each additional litre of water he consumes. Ben's marginal utility from flowers is not given, but we can infer that it is less than 0.5 units per bunch, since he spends the same amount of money on flowers as he does on water, but gets less satisfaction from flowers. This means that water is more valuable to Ben than flowers.

Ben Spends $50 a Year on 2 Bunches of Flowers