Figure 7.4 Global Market for Tin

-Consider the global market for tin represented by Figure 7.4.Initially equilibrium is at point A with a market price of $3.50 per pound and 50,000 pounds.In order to keep tin price relatively stable, an International Tin Agreement has set a price floor of $3.27 and a ceiling of $4.02.As the demand for tin increases to D₁, how will the buffer-stock manager need to respond?

Question

Figure 7.4 Global Market for Tin

-Consider the global market for tin represented by Figure 7.4.Initially equilibrium is at point A with a market price of $3.50 per pound and 50,000 pounds.In order to keep tin price relatively stable, an International Tin Agreement has set a price floor of $3.27 and a ceiling of $4.02.As the demand for tin increases to D₁, how will the buffer-stock manager need to respond?

Quizplus · Accepted Answer

The Answer of Figure 7.4 Global Market for Tin -Consider the global market for tin represented by Figure 7.4.Initially equilibrium is at point A with a market price of $3.50 per pound and 50,000 pounds.In order to keep tin price relatively stable, an International Tin Agreement has set a price floor of $3.27 and a ceiling of $4.02.As the demand for tin increases to D₁, how will the buffer-stock manager need to respond? A) buy 10,000 pounds of tin B) buy 20,000 pounds of tin C) sell 10,000 pounds of tin D) sell 20,000 pounds of tin