Author Question: Donna owns the only dog grooming salon on Lonely Island. If Donna can price discriminate between dog ... (Read 63 times)

Engineer · **on:** Jun 29, 2018

Donna owns the only dog grooming salon on Lonely Island. If Donna can price discriminate between dog owners who are seniors and those who are not, her economic profit will be ________ than if she does not price discriminate and the number of dog

groomings will be ________ than if she does not price discriminate. A) greater; more
B) greater; less
C) less; more
D) less; less

Question 2

What is the water and diamonds paradox of value and what is its resolution?

What will be an ideal response?

lorealeza77 · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

A

Answer to Question 2

The paradox is that water is critical to lifehas high total utilitybut sells for a low price. Diamonds, in contrast, are nonessentialhave low total utilitybut sell for a high price. The paradox is resolved by realizing that the price we are willing to pay is linked to the marginal utility from the next glass of water or diamond, not the total utility of all units of each previously obtained. We already have much water, so the marginal utility of the next water is low. But most people have few diamonds, so the marginal utility of the next diamond is high.