Adam Smith struggled with what came to be called the paradox of value in use versus value in exchange. Water is necessary to existence and of enormous value in use. Diamonds are frivolous and clearly not essential. But the price of diamondstheir valu

Adam Smith struggled with what came to be called the paradox of value in use versus value in exchange. Water is necessary to existence and of enormous value in use. Diamonds are frivolous and clearly not essential. But the price of diamondstheir value in exchangeis far higher than that of water. What perplexed Smith is now rationally explained in the first chapters of every college freshmans introductory economics text. Smith had failed to distinguish between total utility and marginal utility. Do you believe this transformed economics.