Suppose that in the year 2050, one gallon of water is more expensive than a one-carat diamond. What could explain this?
A)Water must be much less scarce in the world of 2050 than today.
B)Diamonds must be much less scarce in the world of 2050 than today.
C)The diamond-water paradox does not hold for any pair of goods in the future.
D)The law of diminishing marginal utility no longer holds.

Question

Quizplus · Accepted Answer

If diamonds become much less scarce, their price would decrease, potentially making them cheaper than water if water becomes more scarce or remains constant in scarcity.

Suppose That in the Year 2050, One Gallon of Water