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
Question 2
Refer to Figure 11-3. For what quantity of labor does production start to display diminishing returns?
A) for more than 1 units of labor B) for more than 4 units of labor
C) for more than 5 units of labor D) for more than 8 units of labor
The different types of competition in nature.
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