Fall Quarter 2005
Assignment Three (30 points) –
This assignment is worth 2.5% of your grade
Due on Monday November 14, 2005, in class.
Please note that I do not accept late assignments.
A large share of the world supply of diamonds comes from Russia and South Africa.
the marginal cost of mining diamonds is constant at $1,000 per diamond, and the demand for
diamonds is described by the following schedule:
If there were many suppliers of diamonds, what would be the price and quantity?
If there were only one supplier of diamonds, what would be the price and quantity?
If Russia and South Africa formed a cartel, what would be the price and quantity?
If the countries
split the market evenly, what would be South Africa’s production and profit?
What would happen
to South Africa’s profit if it increased its production by 1,000 while Russia stuck to the cartel