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 and his marginal utility from water is 0.5 units per litre.Ben's expenditure on flowers and water illustrates the paradox of value because Ben's marginal utility from flowers is ________ his marginal utility from water,and his total utility from flowers is ________ than his total utility from water.
A)greater than;greater
B)less than;less
C)greater than;less
D)less than;greater
E)the same as;less

Question

Quizplus · Accepted Answer

The paradox of value occurs when the prices of goods do not correspond with their utility or usefulness. In this case, Ben spends the same amount of money on flowers and water, but his marginal utility from water is higher than his marginal utility from flowers. Therefore, his total utility from flowers is less than his total utility from water. This is the paradox of value in action, as the price (expenditure) of the goods does not reflect their relative usefulness or utility.

Ben Spends $50 a Year on 2 Bunches of Flowers