A large share of the world supply of diamonds comes from Russia and South Africa. Suppose that the marginal cost of mining diamonds is constant at $3,000 per diamond, and the demand for diamonds is described by the following schedule: see attached If there were many suppliers of diamonds, the price would be $________per diamond and the quantity sold would be __________diamonds.   If there were only one supplier of diamonds, the price would be _________per diamond and the quantity sold would be_________diamonds.   Suppose Russia and South Africa form a cartel. In this case, the price would be _________________per diamond and the total quantity sold would be __________ diamonds. If the countries split the market evenly, South Africa would produce_____________diamonds and earn a profit of.   If South Africa increased its production by 1,000 diamonds while Russia stuck to the cartel agreement, South Africa's profit would _increase or decrease________   to.   Why are cartel agreements often not successful? Choose one below: a. One party has an incentive to cheat to make more profit.   b. Different firms experience different costs.   c. All parties would make more money if everyone increased production.

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
icon
Related questions
Question

A large share of the world supply of diamonds comes from Russia and South Africa. Suppose that the marginal cost of mining diamonds is constant at $3,000 per diamond, and the demand for diamonds is described by the following schedule: see attached

If there were many suppliers of diamonds, the price would be $________per diamond and the quantity sold would be __________diamonds.
 
If there were only one supplier of diamonds, the price would be _________per diamond and the quantity sold would be_________diamonds.
 
Suppose Russia and South Africa form a cartel.
In this case, the price would be _________________per diamond and the total quantity sold would be __________
diamonds. If the countries split the market evenly, South Africa would produce_____________diamonds and earn a profit of.
 
If South Africa increased its production by 1,000 diamonds while Russia stuck to the cartel agreement, South Africa's profit would _increase or decrease________   to.
 
Why are cartel agreements often not successful? Choose one below:
a. One party has an incentive to cheat to make more profit.
 
b. Different firms experience different costs.
 
c. All parties would make more money if everyone increased production.
Price
Quantity
(Dollars) (Diamonds)
8,000
3,000
7,000
4,000
6,000
5,000
5,000
6,000
4,000
7,000
3,000
8,000
2,000
9,000
1,000
10,000
Transcribed Image Text:Price Quantity (Dollars) (Diamonds) 8,000 3,000 7,000 4,000 6,000 5,000 5,000 6,000 4,000 7,000 3,000 8,000 2,000 9,000 1,000 10,000
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 4 steps with 1 images

Blurred answer
Knowledge Booster
Total Surplus
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education