paradox of value

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paradox of value

the proposition that the value (PRICE) of a good is determined by its relative scarcity rather than by its usefulness. Water is extremely useful and its TOTAL UTILITY is high but, because it is generally so abundant, its MARGINAL UTILITY (and, hence, price) is low. Diamonds, by contrast, are much less useful than water but their great scarcity makes their marginal utility (and, hence, price) high.
References in periodicals archive ?
Aside from reinforcing the water-diamond paradox found in the economics literature, the author laments at the relatively lower stature of water engineers in this day and age.
It had a disturbing conclusion: "water will replace oil as the major crisis-generating issue on a global scale," in which case the water-diamond paradox will no longer be an enigma; once the dreaded reality removes any confusion.