This is a class question that needs to be answer with at least 150 words. I would like it explain in your own words, but if not please cite-in-text with reference. No Plagiarism

Let me introduce you to a paradox that was posed early days of economics. Adam Smith in a lecture given in 1760’s at the University of Glasgow, introduced the study of demand by posing a puzzle. He stated that common sense suggests that the price of a commodity must somehow depends on the worth of the good to consumers, or the amount of utility that the commodity gives to the consumer. He pointed out that in some cases utility of a good has very little affect on the price. He cited diamonds and water as an example. He stated that water has an enormous value to consumers and that it’s availability is a matter of life and death. But water often sells at a very low price or free sometimes, and diamonds on the other hand are very expensive and only a few people consider it as a necessity. This is a classical example that we use in any economics class and is discussed virtually in any introductory economics textbook.

Any thoughts or comments? What other examples can you think of where either supply or demand is fixed?