First, what is the paradox?
Courtesy of Wikipedia (bolding added):
The paradox of value (also known as the diamond–water paradox) is the contradiction that, although water is on the whole more useful, in terms of survival, than diamonds, diamonds command a higher price in the market. The philosopher Adam Smith is often considered to be the classic presenter of this paradox, although it had already appeared as early as Plato’s Euthydemus. Nicolaus Copernicus, John Locke, John Law, and others had previously tried to explain the disparity.
Wikipedia also presents the Austrian solution. And here is Hebrew Wikipedia.
Let this henceforth be known as:
זבל פרדותיו של יצחק ולא כספו וזהבו של אבימלך!
(BTW, see the mashal in Yerushalmi brought here.)