The diamond-water paradox arises because
A) essential goods may be cheap, while nonessential goods may be expensive.
B) the marginal utility of certain products increases, rather than diminishes.
C) essential goods are always higher priced than nonessential goods.
D) we sometimes fail to use money as a standard of value.

Question

Quizplus · Accepted Answer

The diamond-water paradox highlights the difference between total utility and marginal utility. Water is essential but has a low price due to its abundance and low marginal utility, while diamonds are nonessential but expensive due to their scarcity and high marginal utility.

The Diamond-Water Paradox Arises Because