1. John was discussing the market for cocoa beans with his friend Kim. John 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 John, right? Briefly explain why or why not. (10 points)
Answers
Answer:
The demand for commodities and their prices are always inversely correlated. As a result, the quantity requested of a good will rise as its price falls. However, there could be instances where both the price and the demand are increasing. For instance, when there is a lack of a certain commodity. This, however, does not imply that the demand curve is in a positive direction; rather, it indicates that, with a constant supply, the demand curve is moving to the right, which eventually results in a rise in the pricing of commodities.
Explanation:
Step 1: The quantity of items that a buyer is willing and able to purchase at a given price is known as demand. Demand for a product is influenced by a number of things.
Step 2: A demand curve may change as a result of some variables, while other factors may cause a demand curve to move.
Step 3: A demand curve will move in response to a commodity's price, while other variables like individual income and shifts in consumer preferences will cause the demand curve to vary.
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