An incredibly rare stone known as Diamontite is used in many consumer products, including watch faces, smartphones, computer monitors, and tablets. In one year, the price of Diamontite has gone from $8/lb. to $107/lb. Under these circumstances and the fact that more companies are looking to use Diamontite in their products, a graph of the supply and demand for this product would show
A) the current price of Diamontite to be below the equilibrium price for this rare gem.
B) the price of Diamontite to be above the equilibrium price for this rare gem.
C) the price of Diamontite to reflect the adjustment of quantity demanded and quantity supplied.
D) consumer demand for any products using Diamontite to shift to the right indicating the desire to purchase the rare gem at any price.

Question

Quizplus · Accepted Answer

When there is a shortage of a natural resource, it becomes scarce. The continued demand for the product will cause the price to increase, at least temporarily, above the equilibrium point where the quantity supplied and the quantity demanded constitute the market price: the price that sellers are willing to sell the product for, and buyers are willing to buy.

An Incredibly Rare Stone Known as Diamontite Is Used in Many