586 - Logical Reasoning

Jack Bygrave is an executive at a major South African diamond company that produces 2% of the world's total annual diamond production. The CFO is anxious to maximize revenues and increase sales. Bygrave, however, believes that increased production would only drive down the world price of diamonds and lower revenues.
Which of the following represents the logical flaw in Bygrave's reasoning?

1. Jack connects the price of unrefined diamonds and the price of jewelry-quality diamonds.
2. He assumes that production goals are similar to financial goals.
3. He assumes that the supply produced by a single company can significantly alter the aggregate supply for the market.
4. He assumes that seasonal and long term supply are proportional.
5. He correlates long-term and short-term demand.