Why Does the Paradox of Value Between Diamonds and Water

question 241

Multiple Choice

Why does the paradox of value between diamonds and water arise?

• A) because water has a low price and a low total utility, while diamonds have a high price and a high total utility
• B) because water has a low price and a low marginal utility, while diamonds have a high price and a high marginal utility
• C) because necessities like water are higher priced than luxuries like diamonds
• D) because diamonds have a higher value to people even though water is essential to life
• E) because water has a low price and a low total utility, while diamonds have a high price but also a low total utility

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Definitions:

GDP Deflator

is an economic measure of inflation that indicates the level of prices of all new, domestically produced, final goods and services in an economy.

Real GDP

The measure of a country's economic output adjusted for price changes, reflecting the value of goods and services at constant prices.

GDP

Gross Domestic Product is an indicator of a nation's economic health, showing the total value of all products and services made within a specific timeframe.

GDP Deflator

An economic metric that converts output measured at current prices into constant-dollar GDP to account for inflation.