The correct answer is: B. utility could be the cause of value.
Adam Smith spoke about the famous diamond-water paradox to show that the value of a good is not determined by its usefulness or scarcity, but by its utility. Utility is the satisfaction or benefit that a person receives from consuming a good. A good with high utility will have a high value, even if it is not scarce. A good with low utility will have a low value, even if it is scarce.
The diamond-water paradox is the apparent contradiction between the high value of diamonds and the low value of water. Diamonds are rare and difficult to obtain, but they are not very useful. Water is abundant and easy to obtain, but it is essential for life. According to the theory of utility, diamonds should have a low value and water should have a high value. However, in reality, diamonds have a high value and water has a low value.
This paradox can be explained by the fact that utility is subjective. The value of a good is not determined by its objective properties, but by the subjective preferences of the individual. Some people may place a high value on diamonds because they are beautiful and rare. Others may place a high value on water because it is essential for life.
The diamond-water paradox shows that the value of a good is not determined by its usefulness or scarcity. It is determined by the utility that the good provides to the individual.