Water is cheap and diamonds are expensive because water has a ________, and diamonds have a ________.
A) low total utility; high total utility
B) low marginal utility; high marginal utility
C) high marginal utility; low marginal utility
D) low marginal utility and a low total utility; high marginal utility and a high total utility

Question

Quizplus · Accepted Answer

Water has a low marginal utility because it is abundant and essential, leading to a lower price. Diamonds have a high marginal utility due to their rarity and desirability, leading to a higher price.

Water Is Cheap and Diamonds Are Expensive Because Water Has