Question

the diamond - water paradox is illustrated by which of the following statements?
water, a necessity, has a relatively low price whereas diamonds, usually a luxury, have a relatively high price.
although water appears to have a relatively low price when compared to diamonds, in reality, it has a relatively higher price.
although water appears to have a relatively low price when compared to diamonds, in reality, the prices are equal.
although water appears to have a relatively low price when compared to diamonds, at the margin, water has the relatively higher price.
although water appears to have a relatively low price when compared to diamonds, at the margin, the prices are equal.
question 8
1 pts
to resolve the diamond - water paradox, it is important to note that under most circumstances,
the marginal utility of water is lower than the marginal utility of diamonds.
the marginal utilities of water and diamonds are about the same.
the marginal utility of water is higher than the marginal utility of diamonds.
the marginal utilities of water and diamonds are inversely related.
the marginal utilities of water and diamonds are directly related.

Explanation:

The diamond - water paradox shows that water, a necessity, has a low price while diamonds, a luxury, have a high price. This is because price is determined by marginal utility, not total utility. Water is abundant, so its marginal utility is low, resulting in a low price. Diamonds are scarce, giving them a high marginal utility and high price. For the second question, resolving the paradox requires understanding that the marginal utility of water is lower than that of diamonds under most circumstances due to water's abundance and diamonds' scarcity.

Answer:

Question 7: Water, a necessity, has a relatively low price whereas diamonds, usually a luxury, have a relatively high price.
Question 8: the marginal utility of water is lower than the marginal utility of diamonds.