Question

This is the solution to the diamond-water paradox: Those things that have high value in use sometimes have low prices because they are consumed at low __________ utility; those things that have low value in use sometimes have high prices because they are consumed at high __________utility.

Answer 1

The correct answer is: marginal utility; marginal utility.

Step-by-step explanation:

The Diamond-Water paradox states that sometimes the goods with low value in use have a relatively high price while goods with high value in use have relatively low price.

Water is a necessity but it has low price while diamonds are luxury goods but have high price.

This is because water has low marginal utility while diamonds have high marginal utility.