Answer to Question #67392 in Economics of Enterprise for charlotte
Blue Kashmir Sapphires is generally believed to be a relatively rare gemstone. Use demand and supply curves to illustrate and explain why such a rare item is sold at such a high price. (10)
It is one of the paradoxes of the gemstone business that in many cases you need supply in order to have demand. A steady supply, especially when combined with good marketing, serves to increase demand and thus push prices higher. Economists call this induced demand, where increased supply actually serves to increase demand.
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