Suppose the marginal cost of producing diamonds is a constant$1,000 per diamond
and demand is described by the following schedule:
Price Quantity
$8,000 5,000 diamonds
7,000 6,000
6,000 7,000
5,000 8,000
4,000 9,000
3,000 10,000
2,000 11,000
1,000 12,000
a. If there were many suppliers of diamonds what would be theprice and quantity?
b. If there were only one supplier of diamonds what would bethe price and quantity?
c. If Russia and South Africa formed a cartel what would bethe price and quantity?
If the countries split the market evenly, what would be SouthAfrica's production and profit? What would happen to South Africa's profitif it increased its production by 1,000 while Russia sticks to the cartelagreement?