Cole Was Discussing the Market for Cocoa Beans with His

question 128

Essay

Cole was discussing the market for cocoa beans with his friend John Schmidt.Cole said,"Ever since Venezuela announced that its cocoa harvest was its lowest ever in fifteen years,the price of cocoa beans has been rising and rising and people are buying more and more.I think the demand for cocoa beans must be upward sloping." Is Cole right? Briefly explain why or why not.

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Definitions:

Gross Margin

The gap between the income from sales and the expense of goods sold, represented as a proportion of sales income.

Net Sales

The revenue from sales of goods or services after deducting returns, allowances, and discounts.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision, representing what is sacrificed as a result of choosing one option over another.

Sunk Cost

Costs that have already been incurred and cannot be recovered, which should not affect future business decisions.