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Description of Equilibrium Price and Quantity

The majority of the world's diamonds comes from Country A and Country B. Suppose that the marginal cost of mining a diamond is $1,000 per diamond and that the demand schedule for diamonds is as follows:

Price Quantity
$6,000 5,500
$5,000 6,500
$4,000 7,500
$3,000 8,500
$2,000 9,500
$1,000 10,500

Questions:
If there were many sellers of diamonds, what would equilibrium price and quantity? Why?
If there were only one seller, what would be the equilibrium price and quantity? Why?
If Country A and Country B formed a cartel, What would be the equilibrium price and quantity? Why? Is this cartel likely to survive? Why or why not?

Solution Preview

Please see the attached file for the numerical part of this solution.

If there were many sellers of diamonds, what would equilibrium price and quantity? Why?

If there are many sellers, the equilibrium price will be $1000 and equilibrium quantity will be 10,500 diamonds. This will happen ...

$2.19