Economics Report: Diamond Price Determination and Tobacco Impact

This economics report delves into the factors determining diamond prices, utilizing supply and demand analysis to identify key influences such as consumer preferences, income levels, market size, and consumer expectations. It examines the law of demand and supply, the role of taste and preferences, income of people and number of consumers. The report also explores the impact of government policies and the nature of the commodity on diamond prices. Furthermore, the report addresses the negative externalities associated with excessive tobacco consumption, including its detrimental effects on health and the various diseases associated with it. The report identifies the addictive nature of nicotine and its role in tobacco addiction, and examines the government's approaches to reduce tobacco consumption. It discusses the supply and demand curve of the price of diamonds, elasticity of supply and demand, and the impact of these factors on market equilibrium. The report provides insights into the diamond market and the consequences of tobacco use.

Economics
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TABLE OF CONTENTS
Introduction......................................................................................................................................3
Task 1...............................................................................................................................................3
Conclusion.....................................................................................................................................11
REFERENCES .............................................................................................................................12
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INTRODUCTION
Economic is the social sciences there is action that include the production, consumption
of products, and distribution and services in all the level at the society. One of the assessing
economic activity is the gross domestic products. In the present reports covers the use of supply
and demand analysis for identifying the main factors which determine the price of diamonds.
Apart form this, negative externalist which can arises form excessive tobacco consumption by
individual is identified. Along with this, the way which government is adopting to reduce the
tobacco consumption is described.
TASK 1
1).
Law of demand means that other things equal means if price of goods and services rises
then demand will fall, while if the price of goods and services decrease then demand will
increase.
Law of supply: the law of supply holds that if the price of other things equal, when price of a
goods rises its quantity supplied will rise, while if price of goods and services fall then its supply
will also fall. the use of supply and demand analysis there are various factor that can be
determine the price of diamonds (Burkhard, Nedkov and Müller, 2012.). There are various
factor which determine the price of diamonds that are as follow:
 Taste and preferences of the consumer: the taste and preference is the important factor
which determine the price of diamonds. Mostly diamond is like by all people but it
cannot be affordable by some people so the demand of the diamond will be no higher
(Roberts and Schlenkera, 2013). The changes on demand of diamonds occur with the
changes in fashion and because of the pressure of advertisement by the seller and
manufacturer. There many people like diamond and spend their income on buying it so
that demand curve will be lie at higher level.
 Income of the people: income of the people also affects the demand of the diamond
among the people. If the income of people is high then they will buy the diamonds as it
cost higher or lower. While the rise in income of the people , the demand curve increase
then whole demand curve will shift upward and vice versa (Yang, Williams and
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Goldstein, 2014.). The higher income led to higher purchasing power, it is the reason that
increase in income have positive effect demand for diamond. For example people who
income is high and live luxury life they can easily affords the price of diamond even if it
is high.
 The number of consumer in the market: The number of consumer in the market also
affects the demand. If there is greater number of consumer in the market of then demand
of the diamond will be rise. Then price of the diamonds will also increase because of the
increasing demand (Kroll, Müller and Fohrer, 2012). The number of factors in which
consumer of a goods depends. If consumer substitute for one good on other then number
of consumer for that substitute goods will be decline and demand of the goods which
used on that place will increase.
 Changes in propensity of consume: The Propensity to consume also affects the demand
for them. If consumer price remain constant then, and their tendency to consume
increases then they spend a greater part of their income on buying the diamonds
(Azevedo and Leshno, 2014). As a result then demand for the goods also increases. It
makes clear that if consumer want to buy a products even with low income then their l be
changes in demand.
 Consumer expectation regard to future prices; If the price of diamond increase then in
future demand of the goods will be rise. Due to some reason consumer expect that price
of the particular products rise then presently they will buy that good in higher quantity.
So the demand curve move to higher level.
 Nature of commodity: when there is necessity of the commodity then the demand is
inelastic while if commodity is required for comfort of for fashion then demand will be
generally elastic (Breeze, Vaissière and Seraphides, 2015). For example Diamond is
come in Comfort zone it is no the necessity of the people sot it is elastic.
Although Diamond is very popular and if its manufacturer raising its price then costumer
will start substituting other precious gems, such as rubies and emeralds. When the price of
diamonds increase then demand for the diamond will be decrease
Using of supply analysis for identifying the factors which determining the price of diamond;
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 The price of commodity; The important factor which determine the supply of diamond
is its price. The supply and price of commodity are directly related with each other. The
quality of supplied commodity also rises with the rise in price. Higher price give chance
for making a profit.
 Price of other goods; the quantity if supply not only depend upon the price of the but
also depend on other price of commodity (Farsalinos, Romagna and Voudris, 2014). For
example if the price of goods. If the price of diamond increase then manufactures will
focus on supplying a more diamond in the market.
 Technology; If there is advance technology then the production of the product will
increase which result in higher supply of the diamond (Breeze, Vaissière and Seraphides,
2015. ). If the demand of the product is high then supply will also increase,
 Transport condition; If the better transport facility available then it increase the supply.
If transport facility is not available then if demand increase then supply cannot increase.
 Government Policies: there are different policy of government such industrial policy,
fiscal policy etc. which has a huge impact on the supply of diamond (Caponnetto,
Auditore and Polosa, 2013). For example when tax on excise duties will decline the
supply of the diamond. While on the other hand if tax is low then the supply will
increases.
Diamonds are normal goods because demand increased when the income of normal people
increase. Another reason supply of diamond in the market decreases which turn to increase the
price of diamonds due to its shortage (Caponnetto, Auditore and Polosa, 2013). Because this
shortage of diamonds forced the price up of and demand of its also increases. The diamond are
luxury with few exact alternative. The price diamond increase which divert the mind of people
to buy other precious gems, such as ruby emerald etc. all are precious but not have same allure as
like diamonds.
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The supply and demand curve of the price of diamonds
The supply and demand theory show that diamonds are highly priced because they are less in
quantity. The equilibrium point in the market for diamonds is reached at the high price per
ounce. In this diagram it shows that supply and demand curve intersect at equilibrium point it
means that demand of diamonds and supply are equal. The are become more costly with the as
high cost is charged in making it (Dawkins, Turner and Soar, 2013). Hence the supply curve
slope up which means that producers. the want higher price so that their increasing cost can be
covered. If they want to produce more then they need to intersect. For the intersection at the
lower price the demand curve and supply curve are positioned in the above diagram.
The factors affecting the elasticity of supply
share production capacity : lots of cost charge in the production of diamonds and they are scare.
So ti sale cost is high which cannot be affordable by all people. The supply of products is more
elastic at the time of rescission where there is much labor and high capital resources.
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Elasticity is the degree of responsiveness in supply and demand in relation to change in price. If
the curve is more elastic, as there is small changes in price, this will lead to huge changes in
quantity consumed(Burkhard, Nedkov and Müller, 2012.). On the other hand, if the curve is less
elastic then their will huge change in price and which affect a change in quantity consume. It has
reflected that there is some relationship between price and quantity demanded and supplied in
which other thing remain constant. Hence, it has been well known that diamond is most precious
which is like by all and they are rare. Its demand is high in the market among the people who are
earning a lots of money and their standard of living is high. While on the other hand it supply is
less because they are rare this lead to increase in the price of diamonds. At the tie most other
precious gems such a ruby and emerald are liked by most of the people and its demand is also
more among medium level people because people are choosing a those ruby in place of diamond
(Barbeau, Burda and Siegel, 2013). The diamond is not the necessity of people they like to
purchase it because of its uniqueness and for fashion or because their price may rise in future. If
it predecitd that price will rise in future then its demand will automatically increase in the
market. So this all are the factors which described above show that how demand and supply are
used in determinant the price of Diamond.
2.)
there are many side effect of tobacco on the health that are thousand of people are died
beacsue of the lung cancer or with other tobacco related illness. Everyone in the world come in
the contact with the tobacco at the college ,or at the work place. There are millions of people are
addicted with the tobacco and smoking. There is big reason of why people get addicted by the
Tobacco, reason is that tobacco products have a nicotine in them, which is a addictive ingredient.
It means that every time when a individual chews the Tobacco that person ingests nicotine. It is
truth that tobacco company are liable for the every year tobacco related death each year
(Burkhard, Nedkov and Müller, 2012.). On the other hand it was believe by the individual that
every one has a right to make a judgment of their life. Some people think that tobacco is not
dangerous as like drugs and alcohol. Every individual who chew tabacoo is responsible for its
bad health. It is the greatest cause of death allover the world. It lead to most commonly disease
that is t affect heart liver and lungs. Further it causes a peripheral vascular disease. Start chewing
tobacco form he earlier stage in life increases the risk of disease. Further the secondhand tabacoo
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and environment tobacco smoke is the cause of adverse health affects in pope of all ages. Use of
the tobacco is significant factor which lead to miscarriage among the pregnant smokers women.
It also lead to other health problem of the of the fetus for example it affects that there is low birth
weight, premature birth and also increases the chance of sudden infant death syndrome (Yang,
Williams and Goldstein, 2014). Women who are pregnant and consume tobacco there health and
health of their child both were adversely affected. By seeing to the their parents children also
started to consume tobacco without knowing its harmful affect on health.
The smoke less tabacoo users and cigar smokers are affects by the mouth cancer of the
larynx. People whoa re addicted of tobacco and drugs cannot be live a healthier life. Generally
lower class people are addicted with the consumption of tobacco and cigarettes as they don't
have enough income and whatever they earn all spend on purchaser of this alcoholic item. Who
are addicted with this suffer form many family issues and work issue. People are frustrated for
their job work ore are unemployed mainly become a drug addicted (Caponnetto, Auditore and
Polosa, 2013). There many negative externalist that can arrive form the Tobasco consumption
on individual . Moreover people who is suffering form any type of stress came in the contact
with the tobacco and other factors. It also affect the financial stability of individual that is
people waste lots of its money on the buying tobacco and further send money on its treatment.
Further it affects many body parts that is it alter the sense of taste and smell.
The negative effects are shown in below diagram and further it describes
The extent of the negative externalize; : the external cost of society that is loss of income
and health because increase the sick days. At Q0 it shows that the distance between marginal
social benefits and marginal private benefits. MPB
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Welfare loss; the shaded triangle int he given diagram show that the MSC is higher than
the MSB in the unit of tobacco consumed between shows that there is welfare loss for the
society and in consuming these units. It shows in Qsoc opt and Q0. Further the MSC is assumed
to be the same as the MPC all cost in production are responsible by the firm. In this price of
output is set and private benefits is equal to private costs.
Government are trying to reduce this type of consumption by the following way
the government can ban smoking and tobacco consummation together that is tobacco products
are shaded by the government and government agencies(Yang, Williams and Goldstein, 2014)..
They make less smoking acceptable and more inconvivnet for the tobacco users. Government
take measure that it banned on advertising of tobacco and promotions. It is restricted to smoke at
work place and charge fine if any individual smoke at workplace or public place. There is
warning signed shown on the products package of tobacco. Hence it was prove that high price
put make people of smoking . By keeping a price of tobacco high, people who earned low
income and younger cannot afford the tobacco (Dawkins, Turner and Soar, 2013.). Government
is keeping a high price and charge high tax rate which discourage people from smoking. TV and
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Illustration 1: Negative externalities of Tobacco consumption

press advertising is banned by the government of UK but still itr is promoted by displaying on
smaller shop. Which is already banned in super market.
Anti smoking campaign: government is continuously running a smoke free campaign for
encourage a people to change their behavior. In the campaign it includes:
people are making ware of the side affect on the health of chewing a tobacco and smoking.
Try to stop young people form smoking
It also trying to encourage people to qitu smoking who are addicted of smoking.
People are making aware that they should not smoke in car near petrol pump or at public place.
By telling them side effects on children and older age people. In the federal law and policy the
government aim is to prevent people, specially children and youth from starting the use of
tobacco. Help people who want to quit using of tobacco products. Further it is trying to reduce
the harmful effects caused by the tobacco. There is people are provided a care home facility so
that they can easily try to quit the chewing tobacco (Yang, Williams and Goldstein, 2014.). They
were helped by the doctor and proper treatment are given to them. Children are also making
aware of the side effect of all this smoking and drug consumption so that avoid this all smoking
and drugs consumption. Moreover the national action plan was taken for improving the health
and of all people. There are twenty one specific national health objectives related to tobacco are
listed. There is educational strategies that is conducted by the which helps in prevent smoking in
20 to 40 percent of adolescents. There are most school where policy and program are kept so that
people are avoid using a tobacco practices. It is necessary tot give continue efforts to build
environment where everyone say no to the tobacco and smoking. The warning message on the
cigrate package are weaker and not much effective. People who receive information regarding
chemical constitution at the time of purchasing a products. There is no information give about
the toxic constituents in tobacco smoke because there is ultra light and light on package, so this
all advertising mislead the smokers. Population based data it show that there decline in
environmental tobacco smoke and common public health hazard that is entirely preventable.
there is price of tobacco which influence the the demand of it and specially among the people.
There is increase in the excise tax and which is considerable impact on the prevalence of
smoking and it reduce the affect for long term (Kroll, Müller and Fohrer, 2012). The state wide
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program has been made which is led to the laboratory for developing and evaluating
comprehensives plan to reduce tobacco use.
CONCLUSION
From the above report it can be concluded that there are various factor that affects the
price of the diamonds. The supply and demand of the diamonds also affected by the income of
people, technology, substitute etc. there is income of individual is high then it will demand
diamonds of purchasing it which if its income low it will prefer to buy its substitute. Further is
can be concluded that diamond is rare so its supply is less which increase the price of the
products. The use of tobacco is very dangerous for health . Many of people are dying due tot he
consumption of tobacco within a year. There is also a many side effect of the use of tobacco and
further there are many policy which government is implemented for reducing the use of tobacco.
It increase the tax on smoking and tobacco products which become difficult for the poor people
and younger to afford it.
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REFERENCES
Books and journals
Azevedo, E. M. and Leshno, J. D., 2014. A supply and demand framework for two-sided
matching markets. Available at SSRN 2260567.
Barbeau, A. M., Burda, J. and Siegel, M., 2013. Perceived efficacy of e-cigarettes versus
nicotine replacement therapy among successful e-cigarette users: a qualitative approach.
Addiction science & clinical practice, 8(1), p.1.
Breeze, T., Vaissière, B.E., Bommarco, R., Petanidou, T. and Seraphides, N., 2015. 3.2
Agricultural policies exacerbate honeybee pollination service supply-demand mismatches
across Europe. Status and trends of European pollinators. Key findings of the STEP project,
p.39.
Burkhard, B., Kroll, F., Nedkov, S. and Müller, F., 2012. Mapping ecosystem service supply,
demand and budgets. Ecological Indicators, 21, pp.17-29.
Caponnetto, P., Auditore, R., Russo, C., Cappello, G.C. and Polosa, R., 2013. Impact of an
electronic cigarette on smoking reduction and cessation in schizophrenic smokers: a
prospective 12-month pilot study. International journal of environmental research and
public health, 10(2), pp.446-461.
Dawkins, L., Turner, J., Roberts, A. and Soar, K., 2013. ‘Vaping’profiles and preferences: an
online survey of electronic cigarette users. Addiction, 108(6), pp.1115-1125.
Farsalinos, K. E., Romagna, G., Tsiapras, D., Kyrzopoulos, S. and Voudris, V., 2014.
Characteristics, perceived side effects and benefits of electronic cigarette use: a worldwide
survey of more than 19,000 consumers. International journal of environmental research
and public health, 11(4), pp.4356-4373.
Kroll, F., Müller, F., Haase, D. and Fohrer, N., 2012. Rural–urban gradient analysis of
ecosystem services supply and demand dynamics. Land Use Policy, 29(3), pp.521-535.
Lerman, C., Schnoll,. and PGRN-PNAT Research Group, 2015. Use of the nicotine metabolite
ratio as a genetically informed biomarker of response to nicotine patch or varenicline for
smoking cessation: a randomised, double-blind placebo-controlled trial. The lancet
Respiratory medicine, 3(2), pp.131-138.
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Roberts, M. J. and Schlenkera, W., 2013. Identifying supply and demand elasticities of
agricultural commodities: Implications for the US ethanol mandate. The American
Economic Review, 103(6), pp.2265-2295.
Yang, W., Williams, J. H., Hogan, P. sF., Bruinooge, S.S., Rodriguez, G.I., Kosty, M.P.,
Bajorin, D.F., Hanley, A., Muchow, A., McMillan, N. and Goldstein, M., 2014. Projected
supply of and demand for oncologists and radiation oncologists through 2025: an aging,
better-insured population will result in shortage. Journal of Oncology Practice, 10(1),
pp.39-45.
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