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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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SIMPLE TAX MULTIPLIER A measure of the change in aggregate production caused by changes in a government taxes that shocks the macroeconomy, when consumption is the ONLY induced expenditure. The simple tax multiplier is the negative marginal propensity to consume times the inverse of one minus the marginal propensity to consume. A related multiplier is the simple expenditures multiplier, which measures the change in aggregate production caused by changes in an autonomous expenditure.
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BEIGE MUNDORTLE
[What's This?]
Today, you are likely to spend a great deal of time searching the newspaper want ads seeking to buy either a rechargeable battery for your cell phone or a T-shirt commemorating the 2000 Olympics. Be on the lookout for letters from the Internal Revenue Service.
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On a typical day, the United States Mint produces over $1 million worth of dimes.
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"Be willing to have it so. Acceptance of what has happened is the first step to overcoming the consequences of any misfortune." -- William James, Psychologist
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NCUA
National Credit Union Administration
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