Hello there, this is my first post on the forum. So I'll try to be a bit entertaining..
At some stages I must admit I found Economy tiring and boring, and that's why I intend to force myself to find something interesting to keep me attached to it. Economic paradoxes indeed did their job, there are bunch of interesting paradoxes about Economy, I'll share few with you, and I'll try with other Economists and non Economists to solve them.
Paradox Water- Diamond
''Things that have the biggest usefulness are often free or cheap, and the things that have the lowest usefulness are often expensive''
In this case we talk about Water and Diamond. As we know, a Diamond have a very low or doesn't have a usefulness at all, but it's cost is an enormous. While the Water is 'free' and we all know how useful water is.
This paradox is one of the basic pointers how the things in Economy aren't always rational. A.Smith wrote ''Nothing is more useful than water, but we can hardly get something in exchange for it, while the Diamond got an extremely low usefulness but we can get a lot in exchange for it''.
Now my own opinion is that we can solve this paradox on multiple ways, the basic one is.
The water is plentiful, while the Diamonds are scarce.
But this is not enough, there are many other factors that depends on it. For an instance, if a hunter needs 2 weeks to hunt 1 wolf, and 2 hours to hunt 1 rabbit. It would be rational and normal that the wolf would cost much more. From this we can conclude that the good value depends on work product. How many effort/time a single man putted into the creating process of a certain good.
The third speculation is , and I believe it's not just a speculation. The price of a certain good depends on the rareness of goods and on the demand for it. If the demand is high, and the good is rare. The price would be an astounding high.
If the demand is low and the goods are plentiful, the price would fall.
What bothering me about this is , why the values are so twisted. Why the people are so irrational? This we cannot explain only with the help of an Economy, but we rather need some Psychological explanations. The best case to understand that is to explain why are the people willing to give 1M $ for a small diamond.
If someone have some other interesting paradoxes post them.
P.S Sorry for some grammar mistakes, English isn't my first neither my second language.
