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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.

Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005

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So there you have it -- the paradox of value, the role of power laws, the impact of evolving technology, the dangers of oversimplified models, and the rise of China -- all delivered in a wrapper of popular music.

Music industry is a proxy for learning economics

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