Asked by Demario Green on May 07, 2024
Verified
Understanding the water and diamond paradox is valuable because it explains why
A) diamonds have many substitutes.
B) water is more important than diamonds.
C) the prices of products are not necessarily measures of the products' usefulness.
D) consumer spending on diamonds has increased, while spending on water has decreased.
Water and Diamond Paradox
A classic economic paradox questioning why diamonds are more expensive than water, despite water being essential for survival and diamonds not.
Product Usefulness
The degree to which a consumer believes a product will be able to satisfy their needs, goals, and desires through its features and performance.
Consumer Spending
The total expenditure by households and individuals on goods and services within a specific time period.
- Describe the concept of the paradox of value, also recognized as the diamond-water paradox.
Verified Answer
CC
Christina ClarkMay 10, 2024
Final Answer :
C
Explanation :
The water and diamond paradox illustrates that the price of a product does not always reflect its intrinsic usefulness or value to society. It highlights how water, essential for life, is often cheaper than diamonds, which are less essential but priced higher due to their rarity and desirability. This paradox is used to explain the difference between 'value in use' and 'value in exchange'.
Learning Objectives
- Describe the concept of the paradox of value, also recognized as the diamond-water paradox.