A majority of the world's diamonds come from South Africa. Suppose the Marginal Cost of mining diamonds is constant at $2,000 per diamond, and the demand for diamonds is described by the following table:
Price Quantity
$8,000 5,000
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 diamonds are produced by perfectly competitive firms, what quantity of diamonds will be produced?
B.) How much profit will the perfectly competitive firms earn?
C.) If diamonds are produced by a single monopoly firm, how many diamonds will the firm produce?
D.) How much profit will the monopoly firm earn?