If water is essential for life, while diamonds are not,
then why is water cheaper than diamonds?
a. Because most people would rather die with a big
diamond ring than live without one.
b. Because the total utility generated by diamonds is
larger than the total utility generated by water.
c. Because most people do not understand that they
need water to live.
d. Because water is abundant, the marginal utility of
water is low, and price reflects marginal utility,
not total utility.