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Question
Despite the fact that water is necessary to sustain life, it is less expensive than soft drinks. Economic theory suggests that this is so because
A) there is a conspiracy among soft drinks producers to hold prices artificially high.
B) although the total utility of water consumption is high, its marginal utility per dollar spent is low when compared to soft drinks.
C) consumers are irrational.
D) sellers of water hold the price of water artificially low because of its importance.
Answer
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