A large share of the world supply of diamonds comes from Russia and South Africa. Suppose that the marginal cost of mining diamonds is constant at
$3,000 per diamond, and the demand for diamonds is described by the following schedule:
Price
Quantity
(Dollars) (Diamonds)
8,000
3,000
7,000
4,000
6,000
5,000
5,000
6,000
4,000
7,000
3,000
8,000
2,000
9,000
1,000
10,000
If there were many suppliers of diamonds, the price would be \$ per diamond and the quantity sold would be diamonds.
If there were only one supplier of diamonds, the price would be \$ per diamond and the quantity sold would be diamonds.
Suppose Russia and South Africa form a cartel.
