Critical Thinking 1: The diamond-water paradox
In â€œAn Inquiry into the Nature and Causes of the Wealth of Nationsâ€ published in 1776, Adam Smith wrote:
â€œNothing is more useful than water: but it will purchase scarcely anythingâ€¦ A diamond, on the contrary, has scarcely any use-value; but a very great quantity of other goods may frequently be had in exchange for itâ€
Explain the diamond-water paradox and find out in the literature how economists have later solved this paradox.
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