Does the fact that diamonds, which we do not need to survive, are ...

[jc611]

Does the fact that diamonds, which we do not need to survive, are more expensive than water, which is a necessity, constitute a violation of utility maximization?
 
  What will be an ideal response?

Question 2

Assortative mating means that
 
  A) poor women and rich men tend to marry.
  B) rich women and rich men tend to marry.
  C) rich women and poor men tend to marry.
  D) there are limited incentives to marry anyone.

[Ahernandez18]

Answer to Question 1

No, the fact that diamonds are less useful but more expensive than water reflects the paradox of value. The resolution to this paradox comes from the observation that utility maximization involves marginal utility (specifically, marginal utility per dollar) not total utility. Water has a low marginal utility, because people have a lot of it, but a very high total utility, because it is essential to life. Diamonds have a high marginal utility, because people have fewer diamonds, but a relatively low total utility because diamonds are not necessary to life. Hence the low marginal utility of water is reflected in the low price of water, while the high marginal utility of diamonds is reflected in the high price of a diamond.

Answer to Question 2

B