Asked by Mauricio Davila on May 10, 2024
Verified
If you were in the middle of the desert,came upon a lemonade stand,and paid $20 for a glass of lemonade,
A) you would definitely be overpaying.
B) you would have gotten at least $20 of utility from the lemonade.
C) there is no way to determine whether or not you overpaid.
Utility
A measure of satisfaction, usefulness or value that a consumer receives from any good or service.
- Comprehend how decisions in maximizing utility are influenced by marginal utility.
- Utilize the principle of utility to elucidate the decisions made by consumers and the occurrence of market anomalies like the water-diamond paradox.
Verified Answer
CS
Ciara SmithMay 14, 2024
Final Answer :
B
Explanation :
The concept of utility in economics suggests that if you willingly pay $20 for a glass of lemonade, especially in a situation like being in the middle of the desert, it indicates that the satisfaction or utility you expect to gain from the lemonade is at least worth $20 to you at that moment.
Learning Objectives
- Comprehend how decisions in maximizing utility are influenced by marginal utility.
- Utilize the principle of utility to elucidate the decisions made by consumers and the occurrence of market anomalies like the water-diamond paradox.