Diamond-Water Paradox part 2

Earlier I posted a question on why the value of diamond is so much higher than the value of water when water is more useful. I got some answers posted by the readers : scarcity, demand and supply. To some extent I do agree with those answers. Diamonds are more scarce than water which means they have a lower supply. Which explains its high value.

But the concept which truly explains this paradox is the concept of marginalism. The marginal utility derived from a product is the change in satisfaction gained as the quantity of the product changes. Applying this to the paradox. Diamond has very high value because the marginal utility is higher than water. And extra gram of diamond gives so much more satisfaction than an extra gram of water. Imagine haven a bit more water. It wouldn't have much or even any difference to your happiness.

That's it ! Do post your questions if you have any. :)