Prior to beginning work on this discussion, read Farah Mohammed’s article, Why Are Diamonds More Expensive Than Water? (Links to an external site.), as well as Chapter 5 in your textbook, especially Sections 5.1 and 5.3, and respond to the following:
- Describe the relationship between total utility and marginal utility.
- Explain if marginal utility can be negative.
- Examine the diamond-water paradox. Why are diamonds more expensive than water?
- Evaluate the law of diminishing marginal utility.
- Identify some items, explaining your reasoning, that do not follow the law of diminishing marginal utility.
- Evaluate how the law of diminishing marginal utility can explain the diamond-water paradox.
The Law of Diminishing Marginal Utility paper
***** https://spaces.hightail.com/space/L1G1YPdOm9 (Links to an external site.)
Amacher, R., & Pate, J. (2019). Principles of microeconomics (2nd ed.). Bridgepoint Education.
- Chapter 4: Elasticity: The Measure of Responsiveness
- Chapter 5: Demand and Consumer Choice
- Chapter 6: Market Failure and Government Intervention Policies