paradox of value(redirected from Diamond-water paradox)
paradox of valuethe 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