1.2. The supply and demand for copper change constantly. New sources are discovered, mines collapse, workers go on strike, products that use it wane in and out of popularity, weather affects shipping conditions, and so on.

a. Suppose you learned that growing political instability in Chile (the largest producer of copper) will greatly reduce the productivity of its mines in two years. Ignoring all other factors, which curve (demand or supply) will shift which way in the market for copper two years from now?

b. Will the price rise or fall as a result of this curve shift?

c. Given your answer in part

b, would a rea sonable person buy copper to store for later?

Why or why not? Ignore storage costs.

d. As a result of many people imitating your choice in part

c, what happens to the current price of copper?

e. Does the action in parts c and d encour age people to use more copper today or less copper today?