The diamond-water puzzle, described by Adam Smith, suggests that the consumer's surplus of water is high and the consumer's surplus for diamonds is low.

Question

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Adam Smith's diamond-water paradox argues that despite water being essential for survival, its price is very low compared to diamonds, which are not essential for survival but have a high price. This suggests that the consumer's surplus for water is high and that the consumer's surplus for diamonds is lower. Therefore, option A is true.

The Diamond-Water Puzzle, Described by Adam Smith, Suggests That the Consumer's