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All though water is useful, yet it is cheap. On the contrary, diamond is not much of use, still it is very expensive. Give an economic reason for this paradox?
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All though water is useful, yet it is cheap. On the contrary, diamond ...
The economic reason for this paradox is scarcity. Although water is useful , yet it is cheap due to its abundance in the economy. Diamonds are very expensive because they are scarce and people are ready to pay a high price...
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All though water is useful, yet it is cheap. On the contrary, diamond ...
Economic Reason for the Paradox of Water and Diamond:
There are several economic reasons for the paradox of water and diamond, which can be explained as follows:
1. Scarcity:
The first and foremost reason for the paradox is the scarcity of diamonds. Diamonds are rare and difficult to mine, which makes them limited in supply. On the other hand, water is abundant and easily accessible, which makes it cheaper. The scarcity of diamonds raises their value in the market, leading to higher prices.
2. Utility:
Another reason for the paradox is the utility of water and diamonds. Water is essential for human survival and has a high utility value. Therefore, its demand is high, and it is cheap. In contrast, diamonds have a low utility value as they are not essential for survival. However, they are highly valued for their beauty and rarity, which makes them expensive.
3. Marginal Utility:
Marginal utility is the additional utility gained from consuming an additional unit of a good or service. The marginal utility of water decreases as its consumption increases, which means that the more water you consume, the less valuable it becomes. Therefore, its price is low. In contrast, the marginal utility of diamonds increases as their consumption increases, which means that the more diamonds you have, the more valuable they become. Therefore, their price is high.
4. Production Costs:
The production costs of water are low, as it is easily accessible and requires minimal processing. Therefore, its price is low. In contrast, the production costs of diamonds are high, as they require extensive mining, processing, and marketing. Therefore, their price is high.
Conclusion:
In conclusion, the paradox of water and diamond can be explained by the economic principles of scarcity, utility, marginal utility, and production costs. Although water is essential for survival, its abundance and low marginal utility make it cheap. In contrast, diamonds have a low utility value but are rare and have a high marginal utility, making them expensive.
There are several economic reasons for the paradox of water and diamond, which can be explained as follows:
1. Scarcity:
The first and foremost reason for the paradox is the scarcity of diamonds. Diamonds are rare and difficult to mine, which makes them limited in supply. On the other hand, water is abundant and easily accessible, which makes it cheaper. The scarcity of diamonds raises their value in the market, leading to higher prices.
2. Utility:
Another reason for the paradox is the utility of water and diamonds. Water is essential for human survival and has a high utility value. Therefore, its demand is high, and it is cheap. In contrast, diamonds have a low utility value as they are not essential for survival. However, they are highly valued for their beauty and rarity, which makes them expensive.
3. Marginal Utility:
Marginal utility is the additional utility gained from consuming an additional unit of a good or service. The marginal utility of water decreases as its consumption increases, which means that the more water you consume, the less valuable it becomes. Therefore, its price is low. In contrast, the marginal utility of diamonds increases as their consumption increases, which means that the more diamonds you have, the more valuable they become. Therefore, their price is high.
4. Production Costs:
The production costs of water are low, as it is easily accessible and requires minimal processing. Therefore, its price is low. In contrast, the production costs of diamonds are high, as they require extensive mining, processing, and marketing. Therefore, their price is high.
Conclusion:
In conclusion, the paradox of water and diamond can be explained by the economic principles of scarcity, utility, marginal utility, and production costs. Although water is essential for survival, its abundance and low marginal utility make it cheap. In contrast, diamonds have a low utility value but are rare and have a high marginal utility, making them expensive.
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All though water is useful, yet it is cheap. On the contrary, diamond is not much of use, still it is very expensive. Give an economic reason for this paradox?
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All though water is useful, yet it is cheap. On the contrary, diamond is not much of use, still it is very expensive. Give an economic reason for this paradox? for Commerce 2025 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about All though water is useful, yet it is cheap. On the contrary, diamond is not much of use, still it is very expensive. Give an economic reason for this paradox? covers all topics & solutions for Commerce 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for All though water is useful, yet it is cheap. On the contrary, diamond is not much of use, still it is very expensive. Give an economic reason for this paradox?.
All though water is useful, yet it is cheap. On the contrary, diamond is not much of use, still it is very expensive. Give an economic reason for this paradox? for Commerce 2025 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about All though water is useful, yet it is cheap. On the contrary, diamond is not much of use, still it is very expensive. Give an economic reason for this paradox? covers all topics & solutions for Commerce 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for All though water is useful, yet it is cheap. On the contrary, diamond is not much of use, still it is very expensive. Give an economic reason for this paradox?.
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