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Andre45 [30]
3 years ago
5

We would expect the total utility of diamonds to be __________ than the total utility of water and the marginal utility of diamo

nds to be __________ than the marginal utility of water.
Business
1 answer:
Gennadij [26K]3 years ago
7 0

We would expect the total utility of diamonds to be <u>lower</u> than the total utility of water and the marginal utility of diamonds to be <u>higher</u> than the marginal utility of water.

<u>Explanation:</u>

The diamond-water paradox presents the puzzling predictions: while water is definitely essential to human existence because without water life can not function, the water price is relatively low. Alternatively, diamonds are actually far less essential to human life, but diamond prices are considerably higher. Thus the effectiveness obtained from water is evidently very high while the utility extracted from diamonds is considerably less.

Here total utility is the aggregate satisfaction of desires and needs gathered from the consumption of a good while marginal utility is the additional satisfaction of desires and needs received from the consumption of one additional unit of good.

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ames Corporation is planning to issue bonds with a face value of $501,500 and a coupon rate of 6 percent. The bonds mature in 10
Yuliya22 [10]

Answer:

The independent cases not given in the question are:

a. Case A: Market interest rate (annual): 4 percent.  

b. Case B: Market interest rate (annual): 6 percent.  

c. Case C: Market interest rate (annual): 8.5 percent.

At 4% issue price is  $583,502.44

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The price of the bond can be computed using the pv value formula in excel.

=pv(rate,nper,pmt,fv)

rate is the market interest given in the three cases divided by since the bond is a semi-annual interest paying bond. for example 4%/2=2%

nper is the time to maturity multiplied by 2  i.e 10*2=20

pmt is the coupon  interest receivable by investor semi-annually which is 6%/2*$501,500=$15045

fv is the face value at $501,500

at 4%

=pv(2%,20,15045,501500)

=$583,502.44

at 6%

=pv(3%,20,15045,501500)

=$501,500.00

At 8%

=pv(4%,20,15045,501500)

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Answer:

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Therefore the above statement should be considered true

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