Water is essential and cheap; diamonds are useless and expensive

Adam Smith pointed out a puzzle at the heart of economics: water has enormous practical value yet a tiny price, while diamonds have almost no practical use yet command enormous prices. Smith couldn't fully resolve why 'value in use' and 'value in exchange' come apart so sharply. It took a century more, and the idea of marginal utility — the value of just one more unit — to explain why abundance crushes price regardless of usefulness.

— Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations — 1776
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