Asked by Hayden Benedict on May 19, 2024
Verified
"Essential" water is cheaper than "nonessential" diamonds because
A) new industrial uses for diamonds have been discovered.
B) the supply of water is great relative to demand and the supply of diamonds is small relative to demand.
C) although the total utility of diamonds is greater, their marginal utility is small.
D) the supply of diamonds is great relative to demand and the supply of water is small relative to demand.
Marginal Utility
An increase in utility or pleasure from consuming one more unit of a particular good or service.
Essential Water
The minimum amount of water required for basic human needs and sustainable living.
Nonessential Diamonds
Diamonds categorized as luxury items, not required for basic living or survival needs.
- Explain the paradox of value, also known as the diamond-water paradox.
Verified Answer
GH
getzemany herreraMay 21, 2024
Final Answer :
B
Explanation :
The price of goods is often determined by their supply relative to demand. Water is essential for life, and its supply is abundant in many parts of the world, making it cheaper. Diamonds, while nonessential, are rare in comparison to demand, making them more expensive.
Learning Objectives
- Explain the paradox of value, also known as the diamond-water paradox.