DIAMOND’S FUTURE
The
supply and demand concept including the market equilibrium is known as some of
the most basic topics in economics. In this post, I will divulge a post that is
suitable and eligible to be related to these topics.
In my observation, the supply of diamonds by De Beers’ will absolutely increase. This is because De Beers’ had invested in a new diamond mine in South African. This mine will begin production in 2021. The company estimates that the new mine will yield 96 million carats of diamonds. Thus, the supply for diamonds will increase in the future.
Other than that, I’m guessing that the demand for diamonds will decrease. This may be due to customer’s expectation. Starting from the year 2014 henceforth, De Beers’ plan to increase the price of diamonds by 6%. Thus, customers may find the new price of diamonds more that reasonable. Furthermore, De Beers’ was accused of manipulating the price of gems. There was also the ‘Blood Diamonds’ – De Beers’ Conspiracy that hit the world in 2006. I’m sure that after this kind of sensitive issues, customers are unwilling to buy such unethical diamonds from De Beers. Thus, making the demand decrease.
When the supply of the diamonds increase, assuming that the demand curve remains constant, the supply curve will shift to the right.
However, when the demand of diamond decrease, with the assumption of the supply staying constant, the demand curve shall shift to the left.
Higher supply and lower demand would lead to a lower equilibrium price of diamonds.
After a few years, the supply will increase, however, the demand will decrease for De Beers’ diamonds. This situation happens when the supply of a product is higher compared to the demand of the product. In my opinion, De Beers’ would make a wiser choice to decrease either their production or the price of diamonds.
In
conclusion, De Beers’ would face a major financial problem regarding their sales if they do not act
now.
To
obtain more information regarding this topic and the monster company, De Beers’, issues, please refer
to the following links stated below:
Written by
Atiqah Jea 0314814
This post is great... Thanks
ReplyDeleteThank you so much, we appreciate it..
DeleteThe assumption of the supply and demand for diamonds is interesting. This post reveals me more knowledge about how the supply and demand can affect the market equilibrium. Would you mind to share with me how demand as well as supply can affect equilibrium price, generally?
ReplyDeleteHope that it can help educated you more about supply and demand including market equilibrium. As the supply of a product increases or decreases, the supply curve will shift to the right or left. This is assuming that the demand curve remain constant. If the supply curve moves to the left, equilibrium price increases. However, if supply curve moves to the right, equilibrium price will decrease.
DeleteSimilarly, if demand increases or decreases, it will shift the demand curve either to the right or left, with supply remaining constant. However, if demand curve moves to the left, price equilibrium decrease but if it moves to the right, price equilibrium will increase.
if the supply is more than demand, what will happen?
ReplyDeleteon the other hand, what will also happen if demand is more than supply?
If supply of product is higher compared to the demand given, this shall cause a surplus.
DeleteWhereas, vice versa, when the demand is higher compared to the supply, this can cause a shortage.
Thank you.