One explanation for the existence of the diamond-water paradox is that
A) the demand for diamonds is greater than the demand for water.
B) people fail to recognize that demand and supply are both equally important in determining the value of a product.
C) the supply of diamonds is greater than the supply of water.
D) people fail to recognize that demand and supply do not matter in determining the value of a product.
E) people fail to recognize that the marginal utility of diamonds is less than the marginal utility of water.

Question

Quizplus · Accepted Answer

The diamond-water paradox exists because people often overlook the fact that both demand and supply are equally important in determining the value of a product. Although the demand for diamonds may be higher than the demand for water, the supply of water is much greater than the supply of diamonds, making it more valuable in terms of scarcity and usefulness. This paradox highlights the importance of considering both demand and supply factors when determining the value of a product.

One Explanation for the Existence of the Diamond-Water Paradox Is