Critical Thinking 1: The diamond-water paradox (Case Study)

Help me study for my Economics class. I’m stuck and don’t understand.

In “An Inquiry into the Nature and Causes of the Wealth of Nations” published in 1776, Adam Smith wrote:

“Nothing is more useful than water: but it will purchase scarcely anything… A diamond, on the contrary, has scarcely any use-value; but a very great quantity of other goods may frequently be had in exchange for it”

Please Explain the diamond-water paradox and find out in the literature how economists have later solved this paradox?

Note: kindly see attached word format to be written into and requirement to folllowed specialy no matching ratio.

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