What price Diamonds?, Wizard Award Winner Options

[Guest_Jox_*]

© Todd Congreve, 2005. I, Todd Congreve, do assert my right to be identified as the author of this work in accordance with Sections 77 and 78 of The Copyrights, Designs And Patents Act, 1988. (Laws of Cymru & England, as recognised by international treaties). This work was simultaneously copyrighted in the United Kingdom of Great Britain and Northern Ireland and the United States of America. This work is posted as an unpublished work in order to elicit critical assistance and other helpful comment, only.

Thanks to Alan, Nina, Fran and Eisa for your crit and comments.

Updated to: 23/06/2005 @ 1719

Ref: TC 0404 AF (22/06/2005)


*Graphic provided by
Celtic Castle Designs

What price diamonds?
[An Economic Paradox*]
by TC

Local food store:
sparkling water -
ninety-nine pence
for five litres -
in a bottle with
carrying handle.

Antwerp jeweller:
cut diamond -
thousands of pounds
for some sparkles -
in a pretty box with
golden flip-top lid.

Ocean lifeboat:            
fresh water -                
everything I own
for a few drops -
in my begging palms:
don’t wrap it.

(end)

===================

Ref: TC 0404 AE

What price diamonds?
[An Economic Paradox*]
by TC

Local food store -
still water:
eighty-seven pence
for five litres -
in a bottle with a
carrying handle.

London jeweller -
cut diamond:
thousands of pounds
for a few gems -
in a pretty box with
golden flip-top lid.

Ocean lifeboat -              
fresh water:                      
everything I own
for anything -
in the palms of my hands:
don’t wrap it.

(end)


A famous old piece of Economics theory is known as the “Water / Diamonds Paradox.” I hope this poem illustrates it.

For the academic...

Virtually all of Economics is predicated upon The Laws of Supply and Demand. Viz: If price is low then supply is low and demand high and if price is high then supply is high and demand low. Wherever demand and supply meet is known as “Equilibrium.” Diamonds and water seem to be able to undermine this. But of course they don’t. This is because demand depends on various factors - price of the good in question (a), prices of all other goods completing for one’s income (b-z), one’s income (Y) and one’s Preferences (“tastes”) (t).

Thus, the demand equation in Economics is: d=p(a)+p(b-z)+Y+t

So the diamonds / water paradox relates to tastes, rather than just prices.

In a life boat we couldn’t care less about diamonds (unless we’ve already gone balmy) but water is vital if we’re ever to see a diamond again. So our relative taste for water vis-a-vis  diamonds is very high. This indicates another aspect in Economics: the less one has of something one wants / needs, then the more one wants it - and the higher price one will bid for it (subject to the demand equation); the more one has of something, the less one is willing to pay for more (again, subject to the demand equation). One thing that makes Economics great fun is that everyone is different - so, unlike the Natural Sciences (Biology, Chemistry and Physics are generally taken to be those these days - plus their off-springs) Social Sciences (Economics, Politics, Ethics) have much more variable data with which to come to terms and construct theories.

Oh? Why a paradox? Simply because usually we’ll usually pay far more for diamonds - Why, when they are far less useful than water, which is, of course, essential? To further understand this concept in Economics we need to investigate Utility Theory - more specifically, marginal utility and particularly, diminishing marginal utility - but such is beyond the scope of this brief explanation.

J.



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[Cybele]

Hi James,

Came to read the poems. Lo love the revision. Will come back to read the lesson when time permits. Wonderful stuff!