The majority of the world’s diamonds comes from Country A and Country B. Suppose that the marginal cost of mining a diamond is $1,000 per diamond and that the demand schedule for diamonds is as follows:
Price Quantity
$ 6,000 5,500
5,000 6,500
4,000 7,500
3,000 8,500
2,000 9,500
1,000 10,500
A. If there were MANY sellers of diamonds, what would equilibrium price and quantity? Why?
B. If there were only one seller, what would be the equilibrium price and quantity? Why?
C. If Country A and Country B formed a cartel, What would be the equilibrium price and quantity? Why? Is this cartel likely to survive? Why or why not?
Use the supply and demand model to explain what happens to the equilibrium price and the equilibrium quantity for frozen yogurt in the following cases.
d.There is a sudden increase in the price of milk.
im confused with this one.
1 answer