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:

Free-Rider Problem

A scenario wherein some individuals benefit from resources or services without contributing to the cost or effort involved in providing them, leading to potential under-provision of those goods.

Interest Groups

Organizations formed by individuals united by a common political, economic, or social goal that try to influence public policy and government actions.

Lobbyists

Individuals or groups who seek to influence political decisions and policies, often representing specific interests or industries.

Legislation Influence

The impact or effect that individuals, groups, or events can have on the creation or amendment of laws.