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DIAMOND-WATER PARADOX: The perplexing observation that water, which is more useful than diamonds, has a lower price. If price is related to utility, how can this occur? This paradox was first proposed by classical economists in the 19th century and was subsequently used as a stepping stone for developing the notion of marginal utility and the role it plays in the demand price of a good. The paradox is magically cleared up with an understanding of marginal utility and total utility. People are willing to pay a higher price for goods with greater marginal utility. As such, water which is plentiful has enormous total utility, but a low price because of a low marginal utility. Diamonds, however, have less total utility because they are less plentiful, but a high price because of a high marginal utility.
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COMMON-PROPERTY GOODS Goods characterized by rival consumption and the inability to exclude nonpayers. Common-property goods are one of four types of goods differentiated by consumption rivalry and nonpayer excludability. The other three goods are private (rival consumption and nonpayers can be excluded), public (nonrival consumption and nonpayers cannot be excluded), and near-public (nonrival consumption and nonpayers can be excluded). Nonrival consumption and the ease of excluding of nonpayers means common-property goods cannot be efficiently exchanged through markets and are often overconsumed.
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PINK FADFLY
[What's This?]
Today, you are likely to spend a great deal of time at a dollar discount store hoping to buy either a how-to book on fine dining or a coffee cup commemorating the first day of winter. Be on the lookout for letters from the Internal Revenue Service.
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This isn't me! What am I?
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Sixty percent of big-firm executives said the cover letter is as important or more important than the resume itself when you're looking for a new job
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"Old age isn't so bad when you consider the alternative. " -- Cato, Roman orator
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M&O
Management and Organization
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