In most cases, the price of a commodity is directly proportionate to its scarcity in the marketplace; however, there is one notable exception. Worldwide diamond production tripled between 1986 and 1996; in that time, however, the average price of a diamond increased by more than 50 percent.

Which of the following, if true, would explain the diamond’s rise in price despite its abundance?

A. The price of precious gems such as sapphires and opals is at an all-time high.

B. The number of contractors whose sole job is the cutting and polishing of raw diamond ore has doubled.

C. Newly established stable governments in African nations have encouraged foreign investment and helped diamond mines flourish.

D. Per capita diamond consumption is much higher in North America than it is in Asia.

E. A powerful cartel that controls more than 90 percent of the world’s diamonds releases them into the market depending on conditions in the world economy.



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