Relative to water, the marginal utility derived from diamonds is:
A) High
B) Low
C) No different
D) None of the above

Question

Quizplus · Accepted Answer

The marginal utility derived from diamonds is high relative to water because diamonds are scarce and have a high value per unit, whereas water is generally more abundant and has a lower value per unit. This concept is related to the paradox of value, where items with less utility (like water, which is essential for life) may have a lower price than items with higher marginal utility but less overall utility (like diamonds, which are not essential but are scarce and desired).

Relative to Water, the Marginal Utility Derived from Diamonds Is