To resolve the paradox of value,you must
A) compare price elasticities of demand across goods.
B) distinguish between marginal and total utility.
C) sacrifice efficiency.
D) minimize consumer surplus.
E) distinguish between marginal utility and price.

Question

Quizplus · Accepted Answer

The paradox of value, also known as the diamond-water paradox, is resolved by distinguishing between marginal and total utility. While water has a high total utility, its marginal utility is low due to its abundance, whereas diamonds have a high marginal utility due to their scarcity, despite having lower total utility.

To Resolve the Paradox of Value,you Must