The Water and Diamonds Paradox of Value

question 63

Multiple Choice

The water and diamonds paradox of value

• A) is that water is essential for life and yet is cheap, whereas diamonds are totally nonessential and yet are expensive.
• B) points out that we generally have a low total utility of water and a high total utility of diamonds.
• C) is resolved by the principle that market price is determined by total utility, not marginal utility.
• D) none of the above

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Definitions:

Solutions

The values or sets of values that satisfy the conditions of an equation or inequality.

Infinite Solutions

A condition in which an equation or system of equations has an unlimited number of solutions.

Consistent

Refers to something that is unchanged throughout in terms of behavior or pattern.