Question

A large, new diamond mine has just opened, and the price of diamonds has gone down. Since she has studied economics, Cecilia decides to buy a diamond necklace since she knows that diamonds are in great demand. diamonds are a nonrenewable resource, making them scarce. the cost of diamonds depends only on the demand. the purchase of diamonds will satisfy wants and needs.

Answer 1

(B) diamonds are a nonrenewable resource, making them scarce.

Now from an Economist perspective, she bought a diamond necklace when the price was low, she knows that sooner or later the prices will go up. Cecilia knows that the only way to increase the value of diamonds is to make them scarce. How then do mining companies make diamonds scarce, they simply reduce production, and then the price will go up.

Answer 2

The answer is B.diamonds are a nonrenewable resource, making them scarce.

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