The De Beers Company, one of the longest-lived monopolies, is facing increasing competition. One source of competition comes from people who might resell their previously owned diamonds
Why is De Beers worried that people might resell their previously owned diamonds?
A) because the availability of previously owned diamonds would make the market demand curve for diamonds more inelastic and force De Beers to lower its price
B) because previously owned diamonds would be a close substitute to newly mined diamonds and therefore reduce De Beers' market power
C) because the availability of previously owned diamonds would increase the market demand for diamonds and dilute De Beers' monopoly
D) because De Beers will not be able to guarantee the quality of previously owned diamonds and fears that its reputation might be harmed
B
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An appropriate test of the effectiveness of an economic model is
A) the number of variables contained within the model. B) the model's ability to predict future economic activity. C) the number of economists who have worked on the model. D) the number of assumptions which the economist has made.
A stock market
A. guarantees that a seller of a stock will get the price at which the stock was purchased. B. is used only to sell new stock issues from corporations and not to transfer existing stocks. C. is used only to sell stocks, not to buy stocks. D. gives an individual a chance to invest in stocks without committing funds for long periods of time.