Refer to the following graph to answer the following questions:

-Which of the following statements is true?
A) Water costs more than diamonds.
B) The total utility of diamonds is greater than the total utility of water.
C) The marginal utility of water is greater than the marginal utility of diamonds.
D) The diamond-water paradox does not exist.
E) The total utility of water is greater than the total utility of diamonds.

Question

Refer to the following graph to answer the following questions:
  
-Which of the following statements is true?
A) Water costs more than diamonds. 
B) The total utility of diamonds is greater than the total utility of water. 
C) The marginal utility of water is greater than the marginal utility of diamonds. 
D) The diamond-water paradox does not exist. 
E) The total utility of water is greater than the total utility of diamonds.

Quizplus · Accepted Answer

The total utility of water is greater than the total utility of diamonds because water is essential for survival and has a wide range of uses, whereas diamonds are luxury items with fewer essential uses. This concept is related to the diamond-water paradox, which illustrates how water, despite its greater total utility, has a lower price than diamonds, which have a higher marginal utility due to their rarity.

Refer to the Following Graph to Answer the Following Questions