The water-diamond paradox discussed in the text implies that
A) water, unlike diamonds, is not subject to the law of diminishing marginal utility
B) the less abundant a good, the lower is its marginal utility although its total utility may still be relatively high
C) the more abundant a good, the lower is its marginal utility although its total utility may still be relatively high
D) people would trade water for diamonds, a useful for a useless good
E) the price of water is higher than the price of diamonds

Question

Quizplus · Accepted Answer

The water-diamond paradox illustrates that the marginal utility of a good decreases as its abundance increases, even though its total utility may be high. This explains why water, which is essential but abundant, has a lower price than diamonds, which are less essential but scarce.

The Water-Diamond Paradox Discussed in the Text Implies That