Case Study: Perfect Competition and Commodities
Perfect Market Competition
Copper is a commodity in the metal category. It has a current market value of $2.74 (CNNBusiness 1). Copper has been behaving steadily in the market from October to May though with minimal fluctuations. However, this trend changed from June where it recorded the highest price of $3.3 and then fell to $2.5 in a span of one month (CNNBusiness 1). This went to September when it recorded the lowest market price at $2.6. Later the price rose to $2.8 where it has stabilized up to now.
For thousands of years, Copper has been of great importance to humanity. Its characteristics have suited its applications in the industries and in many household appliances, and its ore is well distributed worldwide (Folger 1). There are two methods of extraction; open pit and underground mining. The price of copper is affected by factors such as the oil prices, the strength of the dollar, collateral demands from China, the extraction costs, and the unforeseeable occurrences (Folger 1).
The choice for the new commodity is coffee. Coffee markets in Indonesia and Vietnam have sunk due to low stocks in both states; this is despite the improvement of the same worldwide (Nguyen, and Arifin 1). This market situation is attributed to the increase in coffee harvest flooding the market thereby lowering the prices of the commodity. The exports in Indonesia lowered due to decreased produce and an incre…
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