Answer to Question #146816 in Microeconomics for vinod

Question

Why does water without which we cannot live sell for Rs. 10 a bottle. And gold which is not essential sells dear?

Answer 1

Applying labor idea of value by Smith, the charge of a good was triggered by the amount of labour and assets required to bring it to market. Smith believed that diamonds were etra pricey than water due to the fact that they were etra hard to bring to market than water. In this case, costs power prices.