The market for rings is closely linked to the market for high-quality diamonds. If a large quantity of high- quality diamonds enters the market, then the

a.supply curve for diamond rings will shift right, which will creating create a shortage at the current price. Price will increase, which will decrease quantity demanded and increase quantity supplied. The new market equilibrium will be at a higher price and higher quantity.

b.supply curve for diamond rings will shift right, creating surplus at the current price. Price will decrease, which will increase quantity demanded and decrease quantity supplied. The new market equilibrium will be at a lower price and higher quantity.

c.demand curve for diamond rings will shift right, creating a shortage at the current price. Price will increase, which will decrease quantity demanded and increase quantity supplied. The new market equilibrium will be at a higher price and higher quantity.

d.demand curve for diamond rings will shift right, creating surplus at the current price. Price will decrease, which will increase quantity demanded and decrease quantity supplied. The new market equilibrium will be at a lower price and higher quantity.

1.Which of the following is not a characteristic of a perfectly competitive market?

a.Sellers set the price of the product.

b. There are many sellers.

c.Buyers must accept the price the market determines.

d. All of the above are characteristics of a perfectly competitive market.

1.Which of the following events would unambiguously cause an increase in the equilibrium price of cotton shirts?

a.an increase in the price of wool shirts and a decrease in the price of raw cotton

b. a decrease in the price of wool shirts and a decrease in the price of raw cotton

c.an increase in the price of wool shirts and an increase in the price of raw cotton

d.a decrease in the price of wool shirts and an increase in the price of raw cotton