The Price of Water

In a real world, economic decision-making takes place with people making their choices about water and diamonds at the margin. So if anybody was to be given the choice between, would you rather have only water for the rest of your life or only diamonds? You have to choose between one of those two things. If that were the case, then yeah, diamonds would be very cheap. Nobody would choose diamonds over water. Everybody would choose water over diamonds. And so the price of water would be very high and the price of Diamonds would be very low. But that's not how economic activity takes place. That's not how Economic Decision Making Takes Place works.