A DIAMOND RING

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Central problem of economics

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A DIAMOND RING

Factors that affect Supply

Decrease in supply leads to greater prices/ higher in supply leads to decreased prices: When the supply decreases then the competition between producers decreases and therefore the price increases. However when the supply is high the competition between sellers increases which leads to higher prices.

Diamond cutting and polishing: The workers who cut and polish the diamond ring play a significant role in the supply chain. The accessibility of these centers would highly alter the supply of diamonds and once again affect the price of diamond rings.

Stockpiling and hoarding: A few diamond producers prefer to stockpile diamonds in order to balance both supply and high price. However this action can result in shortages and greater prices.

Mining and removal of diamonds: diamond mining requires both effort and a wide range of tools. The removal of diamonds is influenced by the size and accessibility of the diamond as well as the technologies and resources available.

Factors that affect Demand

Advertising: Marketing and advertising can be very important and it can increase the amount of consumers for diamond rings. For example if a celebrity were to wear the diamond ring then it will catch the attention of customers and the demand will increase.

Social value: Diamonds are usually attached with uniqueness and value. Demand can be decided by the concept that diamonds are very rare and merited stones.

Alternatives: The demand for diamond rings can be determined by the availability of specific materials or common gems. This is mainly based on the trends happening for example lab-grown diamonds may be liked rather than common diamonds.

Trends: Fashion trends and consumer preferences can have a huge impact on the demand for jewellery. The demand for diamond rings has a high chance of increasing if it becomes a part of a trend.

Price: The price of diamonds can change due to the cause of supply and demand in the industry. This can have an impact on consumer interest and obsession.

Income levels: The demand for goods for example diamond rings is related to higher net income. Consumers are more attracted to buy when their own earnings increase.