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NOTE How did the Marginal Revolution solve the diamond/water paradox?

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Focusing on individual action, we can see that individuals make their evaluations in marginal units.

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This is the so-called marginal revolution. In other words, they don't take the bread-diamond paradox,

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which Menger and the other marginalists solved.

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Namely, nobody is confronted in real life.

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They were looking at real-life action.

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Nobody is confronted with the choice of all the bread on the world versus all the diamonds in the world.

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In other words, if the angel Gabriel came down to us tonight and said, you know,

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Captured nationwide television, worldwide television, it's the people of which listen.

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You're not confronted with a choice between all the bread on the world from now on forever

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and all the diamonds in the world, you're going to lose one of them, one set.

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Probably most of us will vote for bread, but the point is we're not confronted with that kind of choice yet.

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And we're confronted with individual choice, like should we buy a loaf of bread or a five carat diamond or something like that.

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And in these marginal units, then we realize that supply becomes the major focus here.

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In other words, the more abundant, if bread is very abundant, the unit of bread is not going to be worth much because it's super abundant.

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On the other hand, if diamonds are very rare, each individual diamond is going to be worth a lot.

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So in other words, these valuations take place in units, in so-called marginal units, in loaves of bread or pounds of butter or whatever.

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If you look at it that way, you'll see why water might be placed very highly in the desert

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and not much in a very high water area.