Constantly adjusting to changes in both supply-demand

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The markets for natural resources such as copper are constantly adjusting to changes in both supply and demand. With this in mind, use supply and demand diagrams to answer the following questions: (a) How we would the market price of copper to change if two years from now, some unexpected and unforeseen political unstability in Chile (the world’s largest producer of copper) would lead to the closing of the copper mines in Chile. (b) How would your argument in part a change if, instead of the mine closures being unanticipated, it was actually easy to see the closures coming so none of the key market participants would be caught by surprise when actually it happens. (c) In the context of your answers to parts a and b, carefully explain why economists generally believe that speculation improves economic welfare.

Reference no: EM131005178

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