Chapter 7 - Summative Quiz - 1 The supply and demand for...

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1. 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 world's largest producer of copper) would greatly reduce the productivity of its mines in two years. Ignoring all other factors, which curve (supply or demand) will shift in which direction (left or right) in the market for copper two years from now? a. Demand will shift right. b. Demand will shift left. c. Supply will shift right. d. Supply will shift left. 2. 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.) a. Price will increase, so a reasonable person should buy copper today. b. Price will increase, so a reasonable person should not buy copper today. c. Price will decrease, so a reasonable person should buy copper today. d. Price will decrease, so a reasonable person should not buy copper today. 3. 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. What happens to the current price of copper? Will people use more or less copper today? a. The current price of copper will fall and people will use less today. b. The current price of copper will fall and people will use more today. c. The current price of copper will rise and people will use less today. d. The current price of copper will rise and people will use more today. 4. Suppose you are bidding on a used car. Someone else bids above the highest amount that you are willing to pay. What can you say for sure about that person's monetary value of the car compared with yours?
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5. In the months before the 1990–1991 Persian Gulf War, speculators drove up the price of oil. The average price in October 1990 was $36 per barrel, more than double the price in 1988. Oil speculators, like many people around the world, expected the Gulf War to last for months, disrupting the oil supply throughout the Gulf region. Thus, speculators either bought oil on the open market (almost always at the high speculative
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