The total utility of water is
A) lower than the total and marginal utility of diamonds.
B) lower than the total utility of diamonds, but the marginal utility is higher.
C) higher than the total utility of diamonds, but the marginal utility of diamonds is higher.
D) the same as the total utility of diamonds, but the marginal utilities are the same.

Question

Quizplus · Accepted Answer

Water has a higher total utility as it is a necessity for survival and is used for various purposes such as drinking, cooking, cleaning, etc. Diamonds, on the other hand, have a lower total utility as they are not necessary for survival and have limited uses. However, the marginal utility of diamonds is higher as people are willing to pay more for each additional diamond they acquire, whereas the marginal utility of water decreases as people acquire more of it. Therefore, choice C is the best answer.

The Total Utility of Water Is