The paradox of value as it applies to diamonds and water can be explained by
A)distinguishing between utility and price.
B)water having a high level of marginal utility relative to diamonds.
C)water having a low price relative to diamonds.
D)the fact that utility can't be measured.
E)distinguishing between total utility and marginal utility.

Question

Quizplus · Accepted Answer

The paradox of value is explained by distinguishing between total utility and marginal utility. Water has a high total utility but low marginal utility, while diamonds have a low total utility but high marginal utility, leading to higher prices for diamonds.

The Paradox of Value as It Applies to Diamonds and Water