Question

We would expect the total utility of diamonds to be __________ than the total utility of water and the marginal utility of diamonds to be __________ than the marginal utility of water.

Answer 1

We would expect the total utility of diamonds to be lower than the total utility of water and the marginal utility of diamonds to be higher than the marginal utility of water.

Explanation:

The diamond-water paradox presents the puzzling predictions: while water is definitely essential to human existence because without water life can not function, the water price is relatively low. Alternatively, diamonds are actually far less essential to human life, but diamond prices are considerably higher. Thus the effectiveness obtained from water is evidently very high while the utility extracted from diamonds is considerably less.

Here total utility is the aggregate satisfaction of desires and needs gathered from the consumption of a good while marginal utility is the additional satisfaction of desires and needs received from the consumption of one additional unit of good.