The diamond-water paradox illustrates the idea that ________ determines what consumers are willing to pay for a particular good.

Question

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The diamond-water paradox states that even though diamonds have a much lower total utility than water (as water is essential for survival), diamonds have a higher market value due to their higher marginal utility. This means that consumers are willing to pay more for diamonds because the marginal utility per unit is higher compared to water. Therefore, marginal utility determines what consumers are willing to pay for a particular good.

The Diamond-Water Paradox Illustrates the Idea That ________ Determines What