"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.

Question

Quizplus · Accepted Answer

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.

"Essential" Water Is Cheaper Than "Nonessential" Diamonds Because