The diamond-water paradox of value can be explained by
A) distinguishing between total utility and marginal utility.
B) water's high level of utility relative to diamonds.
C) water's low price relative to diamonds.
D) the fact that utility cannot be measured.

Question

Quizplus · Accepted Answer

The diamond-water paradox is resolved by understanding that the value of a good is determined by its marginal utility, not its total utility. Diamonds have a higher marginal utility compared to water, which is why they are more expensive, despite water having a higher total utility.

The Diamond-Water Paradox of Value Can Be Explained by