Understanding the water and diamond paradox is valuable because it explains why
A)diamonds have many substitutes.
B)water is more important than diamonds.
C)the prices of products are not necessarily measures of the products' usefulness.
D)consumer spending on diamonds has increased, while spending on water has decreased.

Question

Quizplus · Accepted Answer

The water and diamond paradox illustrates that the price of a product does not always reflect its intrinsic usefulness or value to society. It highlights how water, essential for life, is often cheaper than diamonds, which are less essential but priced higher due to their rarity and desirability. This paradox is used to explain the difference between 'value in use' and 'value in exchange'.

Understanding the Water and Diamond Paradox Is Valuable Because It