• Introduction o There is a much greater utility obtained from water as compared to the utility obtained from the expensive diamonds.
• Effects on the economy o The diamond-water paradox affects the economy in various ways.
• Marginal utility o Consumption of the first unit tends to fulfill much more as compared to the second unit and the system continues for the subsequent units.
• Market price and diminishing marginal utility o Evidently, business transaction involves a case of exchange of goods whereby there is acquisition of one commodity o Marginalists have used this to understand how a diamond’s imputed value is affected by the latter, including the market price of diamonds that is also affected.
• Relationship between marginal utility and the aviation industry o The aviation industry is greatly dependent on oil as a complementary good
• Conclusion o Low income elasticity – high marginal utility o High income elasticity – low marginal utility
Introduction
The price of diamond- which is less useful as compared to water- is by far more compared to the prices of water. This has been the major source of conflicting ideas to support this as well as the surprise to also the great economists of the world, including those from the nineteenth century such as Adam Smith. The world in general seems to be still perplexed about this paradox. The surprising observation posed by this paradox of value is that even though humanity cannot do without water, the relative economic price of water is still low in contrast to the economic prices of diamonds which are relatively high. That is, there is a much greater utility obtained from water as compared to the utility obtained from the expensive diamonds (Scott, 1991).
Therefore glaring issu...
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...a person’s income is limited- to purchasing the item. Just as in the case of the diamond-water paradox and marginal utility, income elasticity concepts also portray the very same information. That is, low income elasticity services and products such as food, clothing, shelter and clean drinking water prove to be highest in the priority of any person. Due to higher limitations in the incomes of most of the world’s population, most people spend a larger percentage of there salaries on the above necessities because they have a higher marginal utility to them. Higher income elasticity products and services for instance those offered by the aviation industry and movies of low priority to them hence possess a lower marginal utility (Global source of summaries and reviews, 2007).
Low income elasticity – high marginal utility
High income elasticity – low marginal utility
For example, the more notable difference would be the amount spent on children’s education—in comparing with the same family type as mine, the family with a full-time minimum wage pays $47.89/month for their children’s education while the family with a median income pays $400/month, both at a public school. Whereas, my family type spent a more significantly amount due to the fact that both children are enrolled in a private school. This shows that family’s earning more than the median, are more likely to have their children go to a private education. Moreover, a similarity I found across all family types were the main expenses where money would be primarily dedicated to—specifically, housing, food, utilities, clothing, and having a mobile device and internet. For transportation, I noticed that the majority of family types had OPUS cards—with the exception of individuals on social assistance and full-time minimum wage having bicycles—and the family types of four with a median income, or twice the median income (including my own family type), owned up to two vehicles. This illustrates the difference in terms of costs being distributed for this category as OPUS cards cost about a tenth of what all the expenses would be in owning a car. What’s more, the amount of money set aside for “other” expenses were highly variable across the different family types, with some who could not afford to put any amount at all—such as, the single mother with 2 children on social assistance and on a full-time minimum wage—to a family of two parents and two teenage children making twice the median income who could spend $1431.54/month. Ultimately, I have learnt that for many people, despite having a minimum wage, it is very difficult for an individual to live (and survive) with
The theory of “Diamond-water paradox” which also known as paradox of value was first introduced by the economist Adam smith in the 1700s. In his theories, he points out that practical thing that we use it frequently often have little or even no value in exchange. Examples for the things are like cups, socks and water. In contrast, things that is not practically or has little use to us often have the greatest value in the market. An example may be Sir Alex Ferguson’s last piece of chewing gum that has reportedly sold for nearly £390,000. Apparently, there is no other use but just looking at the chewing gum in the box for display but it has almost the same value as a luxury car or house. This is what “Diamond-water paradox” theory about by Adam
Not everything that is expensive is better. Rich people can get everything they want, but middle class people need to think if they need it, or they can find the same thing cheaper. Most people try to find cheaper things, but some buy expensive things, because they think that it will help them to feel that they are rich. First, people buy those expensive things, and after that they are in debt. Expensive things need a lot of money, but people don’t have them, so they use credit cards to buy for that. According to the article “All that glitters is not gold” says that auto exhibition 32% of attendees bought a car and 56% of attendees reported they were going to buy a car in the near future. It shows that that people don’t have money, but they saw that other people bought the car, and they want it also. My parents just last week bought a new car, because our old one broke. My dad said that everyone has big, and new cars, so we need to buy a costly car like other people have. I thought that it was a stupid idea to look at expensive car, but anyway he found a good car, nor costly, nor cheap car. It is middle cost, and it is a wonderful car. Running after expansive things people forget to look of prices. They forget that they will need to pay for that thing for many years after they buy
Economic value is the worth of a good or service as determined by the market. Although other types of value are often important, economic values are useful to consider when making economic choices – choices that involve tradeoffs in allocating resources. The value of water in the film is extremely important due to the fact that the need of water is almost for anything they do: watering the crops, fields, bathing, drinking, etc. An example of economic value in real life would be diamonds. The scarcity and utility of diamonds automatically increase the value of each rare diamond in the
Blue Gold: World Water Wars’ main argument is that fresh water is a basic human right, and it should not be treated as a commodity; while investors are looking at water as the new oil. The world’s fresh water supply is unsustainable, only 3% of the earth’s entire water supply is fresh, and even less is actually drinkable for people. Blue Gold also points out a few reasons as to why this is happening. The movie argues that water privatization is one of the big culprits of our vanishing water supply. It points out that when water is being pumped into the desert for agriculture through water reloc...
... Although it may not seem fair that there are rich people blowing money on impractical and meaningless things while living in poverty, it’s a reality that the United States has experienced for centuries. Works Cited Desilver, Drew. A. “U. S. Income Inequality, On The Rise.” Pew Research Center.
The distribution of income and wealth is a crucial factor in determining the level of inequality in an economy. Personal income is the flow of funds received in a given period of time by persons or households, and personal wealth refers to the value of net assets of a person or household, it represents the value of items owned less any debts owed by the person or household. Income and wealth are the economic resources that households use to support their consumption of goods and services. There are many benefits of inequality, however many costs as well.
In BASF Group, Business Units are responsible for profit and for return on investment (profit centers), each reporting to an Operating Division. Products within a company of BASF Group that are supplied from one profit center to another for further processing or for sale (i.e. they leave the boundaries of the particular Business Unit or Operating Division) should as a basic rule be charged within the arm’s length principle establishing the downstream unit as a privileged partner. These supplies are therefore charged at transfer prices. Long-term effects of transfer price agreements on business developments and the strategy of upstream and downstream profit centers are taken into account in transfer pricing. BASF’s ZZ clearing desk is responsible for resolving transfer price definition and calculation disputes. As per clearing desk step wise process for calculation of transfer price is defined, which will be used for calculation of transfer pricing. The process cannot be mentioned in this thesis because of confidentiality reasons, and only a general review of approach will be explained.
Freshwater economists base their practices on the perfect market. They trust that the market system will not ever fa...
Stone Age Economics. London: Tavistock University Press, Inc.
The same effect also leads to a decrease in the consumption of good 2.on the other hand; there is an increase in the consumption of good 1 due to the income effect. The same effect also leads to decrease in the consumption of good 2. The overall effect makes the consumer of goods 1 and 2 to be less declined towards purchasing the inferior good.
The word business, trade, exchange of commodities are all synonyms. In the early age of civilization business was carried out on the basis of Bata trade as currency came into existence and there were business set Ups our perception started to change towards business but more so since the last 50 yrs with the advent of the information technology the world has turned around. With the establishment of the Internet business has got globalize Businesses are now able to approach overseas market they are no more confined to their areas of their establishment.
International business contains all business transactions private and governmental, sales, investments, logistics, and transportation that happen between two or more regions, nations and countries beyond their political limits. Generally, private companies undertake such transactions for profit governments undertake them for profit and for political reasons. It refers to all those business activities which involve cross border transactions of goods, services, resources between two or more nations. Transaction of economic resources includes capital, skills, and people. for international production of physical goods and services such as finance, banking, insurance, and construction.
Freshwater in the world makes up only a small portion of water on the planet. While the percentage of water in the world is nearly 70%, only 2.5% is consumable. Even further, only <1% is easily accessible to basic human needs. According to National Geographic, “by 2025, an estimated 1.8 billion people will live in areas plagued by water scarcity, with two-thirds of the world's population living in water-stressed regions as a result of use, growth, and climate change.” With this current trend, water will become more immersed in environmental, economic, political, and social changes. Many of these in later years shall need to be addressed as tension rises:
It’s relative income that’s important. As I’ve noted previously, money is relative. It turns out we don’t mind so much about our actual level of income, so long as we’re earning more than the other people around us. Unfortunately, as we earn more money we’re likely to be surrounded by richer people, so we often end up failing to take advantage of the positive comparison. Material goods don’t make us happy.