Intermediate Microeconomics and Its Application 12th Edition by Walter Nicholson,Christopher Snyder

Exercise 24

The long-run supply curve for gem diamonds is positively sloped because increases in diamond output increase the wages of diamond cutters. Explain why a decision by people to no longer buy diamond engagement rings would have disastrous consequences for diamond cutters but why such a trend would not really harm the owners of firms in the perfectly competitive gem diamond business.