The Market for Diamond Rings Is Closely Linked to the Market

question 4

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

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