Copper in the Warehouse
The question
The market for refined copper in the country of Duraine is initially in equilibrium. Duraine's mining firms become convinced that copper will fetch a far higher price within a few months, and each firm has ample warehouse space in which to hold the metal. The manufacturers who buy the copper are working through orders placed under contracts signed before the forecast, so what they purchase at each price this month is unchanged. Show the effect on this month's market for refined copper. Show the effect on the Supply and Demand graph.
Drag a curve, or use the arrow buttons. Want the free-play version with every control? Open this graph in the sandbox.
Copper in the Warehouse: the worked answer
On the Supply and Demand graph, Supply shifts left.
Why Supply shifts left
Sellers' expectations about future prices are a determinant of supply. Expecting a much better price within months, and having somewhere to store the metal, mining firms hold copper back rather than selling it now, so at every current price the quantity offered is smaller and the supply curve shifts left. The manufacturers who buy copper are locked into contracts signed before the forecast, so their purchases at each price are unchanged and the demand curve does not move.
What happens to the equilibrium
This month's equilibrium price of copper rises and the equilibrium quantity of copper traded this month decreases.
The mistake students make on this one
Students commonly shift supply right, reasoning that a higher expected price rewards producing more. The profitable sale is still months away, so what firms change today is not how much they mine but how much they release: metal goes into the warehouse instead of onto this month's market, which is a leftward shift of current supply.
On exam day
When a stem turns on what sellers expect prices to do later, ask what they can actually do in the market you are graphing right now; storage is what lets an expected future price move today's supply, and it moves it the opposite way.
How this is graded
The checker reads every curve's position before and after your answer. You are marked correct only when Supply shifts left and every other curve on the Supply and Demand graph stays where it started — the same standard an AP reader applies to a drawn graph: the right shift, and nothing extra. There is no AI involved; the rubric is the geometry.
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