The supply and demand for copper change constantly. new sources of copper are discovered, mines collapse, workers go on strike, products that use copper wax and wane in popularity, weather affects shipping conditions, and so on. suppose you learned that growing political instability in chile (the largest producer of copper) would greatly reduce the productivity of its mines in two years. how will this affect the price of copper in two years? given this future change in price, would a reasonable person buy copper to store for later? (ignore storage costs.)

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Business

Ari Marquez

9 May, 23:53

The supply and demand for copper change constantly. new sources of copper are discovered, mines collapse, workers go on strike, products that use copper wax and wane in popularity, weather affects shipping conditions, and so on. suppose you learned that growing political instability in chile (the largest producer of copper) would greatly reduce the productivity of its mines in two years. how will this affect the price of copper in two years? given this future change in price, would a reasonable person buy copper to store for later? (ignore storage costs.)

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Calderon · Answer 1

If there is an expected shortage of copper, you would expect that the price of copper would go up. The law of supply and demand would say that as a resource becomes more scarce, the price would increase.

In this case, a person would want to buy and store copper for the future.