Is the benefit of an additional glass of water greater or lesser than an additional 1ct diamond? Why? Water is essential for life and Diamonds...

This depends on the condition a person finds themself in
when this choice is presented to them.  The marginal utility of a thing is solely in the
"eye of the beholder."  Therefore, the marginal utility of these things will vary with
the condition of the "consumer."

For a person who is very
thirsty, the marginal benefit of the water is greater than that of the diamond.  If a
person is truly dying of thirst, the marginal utility of the water is almost infinite
while the diamond would be useless.

To a person who wants
to propose marriage, however, the situation is reversed and the marginal utility of the
diamond is much higher.

This is because marginal utility is
defined as how much satisfaction a given person gets from consuming the object in
question.  This amount will vary with the situation.