The solution to the paradox of value is found by looking at which of the following?
A) total usefulness of different goods
B) the difference between marginal utility and total utility
C) relative prices and total utility
D) the difference between marginal utility and price
E) None of the above helps solve the paradox of value.

Question

Quizplus · Accepted Answer

The paradox of value, also known as the diamond-water paradox, is resolved by understanding the difference between marginal utility and total utility. This concept explains why goods that are more essential (like water) can be cheaper than goods that are less essential (like diamonds) because the value of each additional unit (marginal utility) of a plentiful good is lower than that of a rare good.

The Solution to the Paradox of Value Is Found by Looking