25_consumer_behavior_ - 10/20/11 and 10/25/11...

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10/20/11 and 10/25/11 .0000001-unrelated goods Income elasticity demand- negative number indicates that it is an inferior good positive means it is a normal good, elasticity less than one is a necessity and elasticity more than one is a want or luxury good Consumer Behavior-basis of the demand curve The Diamond-Water Paradox The paradox: Why are diamonds expensive and water cheap, even though  diamonds are less “useful” to the worlds population than water is?” Think about utility and which choice would make me better off Greater satisfaction (utility) “diamond water paradox”-why is water so cheap? How can this be explained??? Utility a numerical indicator of a person’s preferences in which higher levels  of utility indicate a greater preference. The units that utility is measured in do not matter.
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25_consumer_behavior_ - 10/20/11 and 10/25/11...

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