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Question: diti 35 related to solved problem 33 on page 88...

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diti 3.5 (Related to Solved Problem 3.3 on page 88) In The Wealth gra of Nations, Adam Smith discussed what has come to be known as the diamond and water paradox: hig ply Nothing is more useful than water: but it will purchase scarce anything; scarce anything Sou can be had in exchange for it. A diamond com on the contrary, has scarce any value in use; 3.8 If a bu Bri 3.9 An glo shr but a very great quantity of other goods may frequently be had in exchange for it. Graph the market for diamonds and the market for water. Show how it is possible for the price of water to be much lower than the price of diamonds, even though the demand for water is much greater than the demand for diamonds. a. Source: Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, Vol. I, Oxford, UK: Oxford University Press, 1976; original edition, 1776. b. C.
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