Critical Thinking 1: The diamond-water paradox In "An Inquiry into the Nature and Causes of the Wealth of Nations" published in 1776, Adam Smith wrote: "Nothing is more useful than water: but it will purchase scarcely anything... A diamond, on the contrary, has scarcely any use- value; but a very great quantity of other goods may frequently be had in exchange for it" Explain the diamond-water paradox and find out in the literature how economists have later solved this paradox.

Critical Thinking 1: The diamond-water paradox In "An Inquiry into the Nature and Causes of the Wealth of Nations" published in 1776, Adam Smith wrote: "Nothing is more useful than water: but it will purchase scarcely anything... A diamond, on the contrary, has scarcely any use- value; but a very great quantity of other goods may frequently be had in exchange for it" Explain the diamond-water paradox and find out in the literature how economists have later solved this paradox.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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