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aswizzlebizzle aswizzlebizzle
wrote...
Posts: 369
5 years ago
Why is water much cheaper than diamonds even though water is essential to human lives while diamonds are NOT?
Textbook 
Economics Today: The Micro View

Economics Today: The Micro View


Edition: 19th
Author:
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wrote...
5 years ago
 This is called the diamond-water paradox. The total utility of water greatly exceeds the total utility of diamonds, but the marginal utility of diamonds far exceeds the marginal utility of water because of the much more limited supply of diamonds than water. The relative prices are determined by marginal utilities, not total utilities.
wrote...
5 years ago
Appreciate the effort you put into answering, thank you!
wrote...
5 years ago
You're very welcome
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