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Consumers allocate their resources based on the ______?

Consumers allocate their resources based on the ______?

A.

Law of diminishing marginal utility

B.

Value in use and value in exchange principle

C.

Law of returns to scale

D.

Diamond and water paradox

Correct answer is B

Value-in-exchange: It is the amount of goods and services which we may obtain in the market in exchange of a particular thing. In other words, it is the price of a particular good which can be sold and bought in the market.

Value-in-use is the net present value (NPV) of a cash flow or other benefits that an asset generates for a specific owner under a specific use