What is the name of the paradox regarding the value of a useful item versus a useless luxury, popularized by Adam Smith?
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Diamond-water paradox
It asks why water, which is essential for life, is cheap, while diamonds, which are merely decorative, are expensive. The answer lies in marginal utility—diamonds are much scarcer than water.
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- What name is given to the economic puzzle popularized by Adam Smith that compares the high price of decorative gems to the low price of life-sustaining liquid?