economics

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centuries ago, economists puzzled over the price of diamonds relative to the price of water. Diamonds are mere bling-certainly not a necessity of life in any sense. Water is essential to life and has hundreds of valuable uses. Yet, diamonds are expensive, while water is cheap. For example, a one-carat diamond might cost $10.000. For the same money, you could buy 10.000 bottles of water or about 1.6 million gallons of municipally supplied water (from the tap). However measured, diamonds are extremely expensive relative to water.
How can something as useful as water cost so much less than something of such limited use as diamonds? In 1776, Adam Smith discussed what has come to be called the … diamonds water paradox. Because water is essential to life, the total utility derived from water greatly exceeds the total utility derived from diamonds. Yet, the market value (price) of a good is based not on its total utility but on what consumers are willing and able to pay for an additional unit– that is on its marginal utility.
to learn more on water supply and usage in the U.S. , visit the US Geological Survey: https://ga.water.usgs.gov/edu/mqanda.html
to learn more about many water issues such as the economic effect of pollution, visit the Environmental Protection Agench:http;//www.epa.gov/science-and-technology/water-science
for this assignment we are going to consider the diamonds-water paradox. Search the web for additional information. You should find two sources that will increase your understanding of this topic. You many not use Wikipedia. Summary of the paradox, and include the sources that you used. Determine another example of this economic concept.