SOLVED

21) Other things remaining the same, marginal utility theory implies that a rise in the price of a good A) increases the consumer surplus. B) decreases the consumer surplus. C) leaves consumer surplus unchanged. D) has an effect on consumer surplus that cannot be determined. E) decreases consumer surplus by the amount equal to the total utility of all goods consumed before the price rise but not after the price rise. 22) The paradox of value as it applies to diamonds and water can be explained by A) distinguishing between utility and price. B) water having a high level of marginal utility relative to diamonds. C) water having a low price relative to diamonds. D) the fact that utility can’t be measured. E) distinguishing between total utility and marginal utility. 23) The high price of diamonds relative to the price of water reflects the fact that, at typical levels of consumption, A) the total utility from water is relatively low. B) the total utility from diamonds is relatively high. C) the marginal utility from water is high. D) the marginal utility from diamonds is relatively low. E) the marginal utility from diamonds is greater than the marginal utility from water. 24) Which one of the following statements is true? A) Since consumers of a good consume this good until the price equals the value of the last unit, they clearly get no benefit from consuming this good. B) Consumers choosing between goods X and Y will set MUX = MUY. C) The value of a good to a consumer is measured by the price. D) Consumer surplus on a unit of a good will never be zero. E) If the marginal utility per dollar from good X is less than the marginal utility per dollar from good Y, then the consumer should shift some spending from X to Y. 25) The paradox of value A) is that values are the same for different people. B) is that economists can calculate marginal utility, even though utility is unmeasurable. C) is resolved by an appeal to the law of diminishing total utility. D) remains unresolved by economists. E) is resolved by an appeal to the difference between marginal utility and total utility. Â Â