Why is water cheaper than diamond?

At low levels of consumption, water has a much higher marginal utility than diamonds and thus is more valuable. People usually consume water at much higher levels than they do diamonds and thus the marginal utility and price of water are lower than that of diamonds.

Which is more valuable diamond or water?

Smith noted that, even though life cannot exist without water and can easily exist without diamonds, diamonds are, pound for pound, vastly more valuable than water.

Why are diamonds more expensive than water when you can live without diamonds but Cannot live without water?

The greater the supply we have of something and the more we use it, the less we value it. “Economists tell us that the law of diminishing marginal utility dictates that consumers place a greater value on diamonds than on life-giving water.

Why are people willing to pay more for diamonds than water?

Economists later discovered that people make decisions based on their marginal utility (enjoyment) rather than total utility (enjoyment). In total, people get more enjoyment from water rather than diamonds. This is why we are willing to pay more for diamonds than water.

Why diamond is expensive?

The rarity, difficulties in mining, durability, cut, clarity, color, and carat of diamonds make them expensive and in demand. Only 30\% of the mined diamond stones match the standard gem quality that is required. It is this rarity of stone that makes them the world’s most expensive diamond.

Why should diamond be priced so high?

Diamonds are high-priced because the demand is high relative to the limited quantity available. Water is inexpensive because it is typically fairly abundant, but if one is dying of thirst, then it would have a much higher value-in-exchange–conceivably even greater than diamonds.

What is the economic value of diamonds?

The impact diamond revenues have on world economies includes: The diamond trade contributes approximately $7.6 billion per year to Africa. The two countries Russia and Botswana together produce 43\% of the total volume, and 53\% of the total value, of rough diamonds in the world.

What makes diamonds so valuable and expensive?

The reason why diamonds are so expensive can be explained as follows:-. Diamonds are used for making jewellery and diamond jewellery proves to be the first choice of every woman. The demand for diamonds in the international market, thus makes them expensive with every woman’s dream being to bedraped with diamond sets.

Why are emeralds rarer than diamonds?

As with diamonds, the value of an emerald is dependent upon the 4C’s of cut, clarity, color and carat. Emeralds are rarer than diamonds and large, clear vivid emeralds are even rarer, making these extremely valuable gemstones.

Why are diamonds harder than granite?

Knives cannot scratch true granite. The only thing harder than granite is diamond. For example, diamond is scored 10 on the MOH’s hardness scale and granite is scored 7. Diamond blades are the only thing that can cleanly cut through granite.

Why does Diamond cost more than water?

The reason why diamonds are more expensive than water (generally speaking) is because there is a lot more water around than diamonds. If you live in America, all you need to do is turn on the faucet, and you can get as much water as you need. But if you wanted a good quality diamond, where would you go? You would have to go to a store to buy one.