In recent years, the world demand curve for copper shifted rightward due to continued economic growth in China and other emerging economies. Also, the costs of extracting the copper increased due to higher energy prices. As a result, we observed:
A) higher equilibrium copper prices and unambiguously lower quantities.
B) higher equilibrium copper prices and unambiguously higher quantities.
C) higher equilibrium copper prices and either higher or lower quantities.
D) lower equilibrium copper prices and either higher or lower quantities.

Question

Quizplus · Accepted Answer

The rightward shift in the world demand curve for copper would lead to higher equilibrium prices. However, the increase in extraction costs could either decrease the quantity of copper supplied or result in a shift in the supply curve to the left. Thus, the equilibrium quantity could either be higher or lower, leading to a range of possible outcomes for copper prices and quantities. Therefore, the correct answer is C.

In Recent Years, the World Demand Curve for Copper Shifted