2022_심화영어

Why do marginalists think diamonds cost more than water? Q5 Connecting to You Why is bottled water more expensive than tap water, even though they are the same thing? marginalist tremendous urgent conversely New Words 05 10 15 20 In explaining the diamond-water paradox, marginalists explain that it is not the total usefulness of diamonds or water that determines price, but the usefulness of each unit of water or diamonds. It is true that the total utility of water to people is tremendous, because they need it to survive. However, since water is in such large supply in the world, the marginal utility of water is low. Each additional unit of water that becomes available can be applied to less urgent uses as more urgent uses for water are satisfied. For example, it may be used not to drink but to wash the streets. Therefore, any particular unit of water is worth less to people as the supply of water increases. On the other hand, diamonds are of such low supply that the usefulness of one additional diamond is greater than the usefulness of one additional glass of water. Thus, diamonds are worth more to people. Therefore, those who want diamonds are willing to pay a higher price for one diamond than for one glass of water, and sellers of diamonds ask high prices. Conversely, a man dying of thirst in a desert would have greater marginal use for water than for diamonds, so he would pay far more for water. Pricing Mysteries! 79