Jewelers are willing to hold large inventories of diamonds
A) because the demand for diamonds is large and growing
B) because that minimizes the fixed cost of producing diamond jewelry
C) because, given monopoly control of the market for diamonds, they are confident that the price of diamonds will not plummet rapidly
D) because, given monopoly control of the market for diamonds, they are confident that the price of diamonds will rise rapidly
E) because that is what their customers expect them to do

Question

Quizplus · Accepted Answer

The high inventories of diamonds held by jewelers are supported by their confidence that the price of diamonds will not drastically fall due to their monopoly control over the diamond market. This means that they can hold large inventories of diamonds without the fear of a sudden plunge in their value.

Jewelers Are Willing to Hold Large Inventories of Diamonds