Since price tends to equal total utility, the price of water is low and the price of diamonds is high.

Name: Since price tends to equal total utility, the price of water is low and the price of diamonds is high.
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Question

Quizplus · Accepted Answer

Price is determined by supply and demand, not total utility. Water is abundant and has a low price despite its high total utility, while diamonds are scarce and have a high price despite their lower total utility.

Since Price Tends to Equal Total Utility, the Price of Water