Products that are essential for life, such as water or groceries, yield more marginal utility than rare products, such as diamonds or luxury vehicles. A. True B. False.

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14 November, 15:50

Products that are essential for life, such as water or groceries, yield more marginal utility than rare products, such as diamonds or luxury vehicles. A. True B. False.

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Answers (1)

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Marquise Davis · Answer 1

The correct answer is the option B: False.

Explanation:

On one hand, the term of marginal utility is the name given, in the field of economics, to the satisfaction or benefit that a user obtains from a product when the person adds one more unit of that product, that means that this type of utility is always decreasing its value, because if the person adds one more unit of the product then the satisfaction of that last unit will have less value than the one before.

On the other hand, there is a theory called the value paradox that established that the price of the goods are determinated by the marginal cost, and that the value of the diamond is higher than the value of the water because the first one has more exchange value than the second one. To sum up, understanding that the diamonds have a higher price in the market than water due to its scarcity and its exchange value, then it is the diamond the one that yields more marginal product that the water.