Thinking at the Margin

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Why are diamonds more expensive than waterinfo-icon? Prof. Mario Villarreal-Diaz answers this question using what economists call marginal analysisinfo-icon. Essentially, the marginal utilityinfo-icon of water decreases faster than the marginal utility of diamonds. Put another way, people face decisions in a particular context and timeinfo-icon. In modern economies, people have ready access to water on the margin, but do not have the same level of access to diamonds.

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