Adam Smith from the Classical School had introduced the “water-diamond paradox” in his Theory of Value. But he did not solve the paradox because he failed to understand the concept of utility. Explain...

Adam Smith from the Classical School had introduced the “water-diamond paradox” in his Theory of Value. But he did not solve the paradox because he failed to understand the concept of utility. Explain by demonstrating relevant graph how this paradox was solved by William Stanley Jevons from the Marginalist School by using law of diminishing marginal utility.