The Market for Diamond Rings Is Closely Linked to the Market

question 110

Multiple Choice

The market for diamond rings is closely linked to the market for high-quality diamonds.If a large quantity of high-quality diamonds enters the market,then the

• A)supply curve for diamond rings will shift right,which will create a shortage at the current price.Price will increase,which will decrease quantity demanded and increase quantity supplied.The new market equilibrium will be at a higher price and higher quantity.
• B)supply curve for diamond rings will shift right,which will create a surplus at the current price.Price will decrease,which will increase quantity demanded and decrease quantity supplied.The new market equilibrium will be at a lower price and higher quantity.
• C)demand curve for diamond rings will shift right,which will create a shortage at the current price.Price will increase,which will decrease quantity demanded and increase quantity supplied.The new market equilibrium will be at a higher price and higher quantity.
• D)demand curve for diamond rings will shift right,which will create a surplus at the current price.Price will decrease,which will increase quantity demanded and decrease quantity supplied.The new market equilibrium will be at a lower price and higher quantity.

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Definitions:

Dividends

Dividends are the portion of profit a company decides to distribute to its shareholders, often on a regular basis.

Equity

The value of an asset after deducting the cost of liabilities, representing the owner's interest in a company.

Investing Activities

Investing activities are financial transactions related to the acquisition or disposal of long-term assets and other investments not considered cash equivalents, as detailed in the statement of cash flows.

Financing Activities

Activities that result in changes in the size and composition of the equity capital or borrowings of the company, as reported in the statement of cash flows.