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Why are diamonds pricey but water is cheap, even though we need water more?
Updated: 11-Apr-2025

This is known as the "paradox of value." Though water is essential, it's abundant in many places, so its market price is low. Diamonds, while not essential, are rare and considered luxurious, which drives up demand and price.

This shows how scarcity and perceived value influence cost, not just utility. Economists use this example to explain how markets value items based on demand and rarity, rather than practical necessity.

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