Why do we place such high value to things such as gold and diamonds? Wouldn’t it make sense to put that value on things that are more “useful”?
In: Economics
A bunch of answers not really going after the real reason. Generally today economists use what’s called the marginal theory of value to explain prices. So the price for something is how much someone is willing to pay for one more of them. Useful things like water tend to be cheap because people have a lot of them so they don’t need a little bit more. Diamonds or gold are expensive because there isn’t much of them and so people will pay a lot for one more. Obviously, people have to want the stuff for this to work, but why people want things is pretty complicated and not really an objective question.
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