The Diagram Below Illustrates the International Tin Market

question 88

Multiple Choice

The diagram below illustrates the international tin market. Assume that the producing and consuming countries establish an international commodity agreement under which the target price of tin is $5 per pound.
Figure 7.2. Defending the Target Price in Face of Changing Supply Conditions
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-Consider Figure 7.2.Suppose the supply of tin increases from S₀ to S₁.Under a buffer stock system, the buffer-stock manager could maintain the target price by

• A) purchasing 15 pounds of tin.
• B) purchasing 30 pounds of tin.
• C) selling 15 pounds of tin.
• D) selling 30 pounds of tin.

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