The Diamond Water Paradox
The Diamond Water Paradox; sometimes known as the Diamond and Water Paradox, is an economic concept that underlines the seeming contradiction between the low price and utility of some vital items, such as water, and the high price and utility of some non-essential goods, such as diamonds.
The classical economist Adam Smith first articulated this dilemma in his book "The Wealth of Nations" in 1776. The paradox calls into question traditional concepts of value based on utility and scarcity, shining attention on the role of marginal utility and market demand in price determination.
As an introduction to the paradox, the Diamond Water Paradox begins by contrasting two commodities—diamonds and water—that appear to have opposing values despite their opposite relevance in human life.