Paradox of Value(Also known as thediamond-water paradox) describes the vast difference seen in the prices of certain essential goods and non-essential goods. Many goods and services that are essential to human life have a much lower price in a market economy than other goods and services that are not so essential.
- used to describe the vast difference in the wages of essential workers such as nurses and farmers and that of others such as CEOs of companies, who are considered by many to be nonessential workers. This paradox has been cited by many critics of the market economy, who argue that it is an unfair economic system that leads to inequality among different populations.
- used in discussions on the theory of value to elaborate the concept of marginal utility and how the use value of an object can differ quite a lot from its exchange value.
Theory of Marginalism, argued that the price or the exchange value of goods and services is not determined by their simple use value. Instead, it is determined by theirmarginal use value (or utility)to the buyer. This is the most widely accepted resolution of the paradox of value among economists.