“The price of diamonds is too high”This essay discusses the statement “the price of diamonds is too high”; will analyze the diamond cartel and its history to determine the validity of this claim. Various microeconomic theories, all involved in the diamond cartel, will be discussed and explained. The Oxford Dictionary defines a cartel as “an association of producers or suppliers for the purpose of maintaining prices at a high level and limiting competition” [Oxford Dictionary; unknown]. Therefore, the diamond cartel consists of a group of diamond producers/suppliers who band together to limit the supply and consequently increase the price of diamonds. This essay will mainly focus; about the De Beers diamond cartel and how this cartel has led people to believe that diamonds are scarce ["Have you ever tried to sell a diamond?" –Edward Jay Epstein; unknown]. The cartel's success can be explained using microeconomic theories, such as how a decrease in supply and an increase in demand for a product increases its price. The main aim of the diamond cartel is to decrease the supply of diamonds (hence; diamonds appear to be in short supply) to increase the price. As shown in the graph below, according to the law of supply, decreasing the supply of a product shifts the supply curve up and to the left (from supply curve 1 to 2), thus, changing the equilibrium point (from E1 to E2) and increase the price of the product (from P1 to P2) [Michael Parkin et al.; 2010].One of the cartel's goals is to maintain a resilient monopoly position [Ivona Vogelsang; 2005]. The Oxford Dictionary defines a monopoly as “the exclusive possession or control of the s…… medium of paper……e. Company interior. [Online]. Available from: http://www.businessinsider.com/history-of-de-beers-2011-12?op=1. [Accessed: April 15, 2014].• “Have you ever tried to sell a diamond?” –Edward Jay Epstein. (Unknown). Produced and directed by Ines and Ena Talakic. [YouTube Video]. Available from: http://www.youtube.com/watch?v=7Yo6EVP-Trw.• Oxford Dictionaries. (Unknown). Oxford University Press. [Online]. Available from: http://www.oxforddictionaries.com/definition/english/cartel. [Accessed: April 14, 2014].• Parkin, M., Kohler, M., Lakay, L., Rhodes, B., Saayman, A., Schoer, V., Scholtz, F., Thompson, K. (2010 ). Global and Southern Perspectives: Economics. Cape Town: Pearson Education South Africa (pty) Ltd.• Vogelsang, I. (2005). The international diamond cartel. [Online]. Available from: http://are.berkeley.edu/~sberto/debers.pdf. [Accessed: April 14 2014].