1. Using demand and supply curves to show the impact of the events in the case on the price,supply and demand of copper. 2.What are the implications of these trends for managerial decision making? 5:46X←Managerial Econ...Copper Surplus Is Foreseen in '07by Allen SykoraWall Street Journal, February 28, 2007Copyright © 2007 Dow Jones & Co. Reprinted by permission of Dow Jones & Co. via Copyright Clearance Center.A number of analysts are looking for the global copper marketto have a surplus this year, citing an expectation for steadierproduction after a strike-filled 2006 and potential substitutionfor the mineral....Data for 2006 from the International Copper Study Groupsuggest the market already has moved into a small surplus. Thegroup lists a surplus of 108,000 tons for the first 11 monthsof 2006, compared with a 263,000 deficit for the same periodin 2005....Chuck Bradford, metals analyst with Soleil Securities,looks for a surplus in the 200,000-ton area."One of the interesting things in the International CopperStudy Group piece [of Feb. 16] was a rebound in the operatingrate at the mine level," Mr. Bradford said. "If you lookat the operating rates in earlier '06, they were well belowwhere they had been any time during the rest of thedecade....Production was lost during much of 2006 due to a series ofstrikes, Mr. Bradford said.The ICSG report said global mine output was up 3%in November compared with the same month in 2005. Butproduction disruptions in the first part of the year left outputfor the first 11 months of 2006 essentially unchanged-up0.1% compared with the same period in 2005.Mr. Bradford said he doesn't anticipate a "huge" coppersurplus in 2007, "because I think we'll have strikes again."Also, he said, when prices are high, companies are willingto mine lower-grade material that they may have nototherwise....Michael Skinner, of base metals sales with Standard Bank,said his firm looks for a modest surplus this year, assumingthere is a "constant stream of production" without as manylabor disruptions as in 2006...."It mainly has to do with continuity of production thisyear," he said. "There is certainly incentive to do that at theseprices. That will help take us into surplus."Mr. Skinner cautioned there can be wide variations in thesupply-and-demand estimates by various researchers. This isespecially the case for copper due to the difficulty in obtainingdata from China.Mr. Skinner said while the ICSG put the surplus at 108,000metric tons for the first 11 months of 2006, his firm estimateda surplus of 40,000 metric tons in all of 2006....Mr. Bradford said a measure of demand may be how muchsubstitution for copper occurs due to historically strong prices."My biggest fear is substitution," he said. "I keep askingpeople about it, and I get very conflicting stories. The alu-minum guys are all convinced they have benefited materiallyfrom substitution away from copper into aluminum."[Copper] has been losing markets because of the price. Itjust takes a long time for that to happen," Mr. Bradford said.An example, he said, is the move toward plastic piping inhome construction.Mr. Skinner also said industry appears to be making someeffort to find substitutions for copper.He said his firm believes the economy won't slow as muchas some have forecast. If demand in other parts of the worldholds up, overall demand could increase "marginally" thisyear, he said.The key may be the level of Chinese imports, he said."The market is looking at that very carefully. The scrapsubstitution is also a key," Mr. Skinner said.While many analysts look for Chinese buying to pick upthis year, some caution it may not be as aggressive as someexpect. In particular, many suspect China has drawn downinventories that must now be rebuilt....=|||୦3ll 24%.

Question

1.  Using demand and supply curves to show the impact of the events in the case on the price,supply and demand of copper. 2.What are the implications of these trends for managerial decision making? 5:46X←Managerial Econ...Copper Surplus Is Foreseen in '07by Allen SykoraWall Street Journal, February 28, 2007Copyright © 2007 Dow Jones & Co. Reprinted by permission of Dow Jones & Co. via Copyright Clearance Center.A number of analysts are looking for the global copper marketto have a surplus this year, citing an expectation for steadierproduction after a strike-filled 2006 and potential substitutionfor the mineral....Data for 2006 from the International Copper Study Groupsuggest the market already has moved into a small surplus. Thegroup lists a surplus of 108,000 tons for the first 11 monthsof 2006, compared with a 263,000 deficit for the same periodin 2005....Chuck Bradford, metals analyst with Soleil Securities,looks for a surplus in the 200,000-ton area.&#34;One of the interesting things in the International CopperStudy Group piece [of Feb. 16] was a rebound in the operatingrate at the mine level,&#34; Mr. Bradford said. &#34;If you lookat the operating rates in earlier '06, they were well belowwhere they had been any time during the rest of thedecade....Production was lost during much of 2006 due to a series ofstrikes, Mr. Bradford said.The ICSG report said global mine output was up 3%in November compared with the same month in 2005. Butproduction disruptions in the first part of the year left outputfor the first 11 months of 2006 essentially unchanged-up0.1% compared with the same period in 2005.Mr. Bradford said he doesn't anticipate a &#34;huge&#34; coppersurplus in 2007, &#34;because I think we'll have strikes again.&#34;Also, he said, when prices are high, companies are willingto mine lower-grade material that they may have nototherwise....Michael Skinner, of base metals sales with Standard Bank,said his firm looks for a modest surplus this year, assumingthere is a &#34;constant stream of production&#34; without as manylabor disruptions as in 2006....&#34;It mainly has to do with continuity of production thisyear,&#34; he said. &#34;There is certainly incentive to do that at theseprices. That will help take us into surplus.&#34;Mr. Skinner cautioned there can be wide variations in thesupply-and-demand estimates by various researchers. This isespecially the case for copper due to the difficulty in obtainingdata from China.Mr. Skinner said while the ICSG put the surplus at 108,000metric tons for the first 11 months of 2006, his firm estimateda surplus of 40,000 metric tons in all of 2006....Mr. Bradford said a measure of demand may be how muchsubstitution for copper occurs due to historically strong prices.&#34;My biggest fear is substitution,&#34; he said. &#34;I keep askingpeople about it, and I get very conflicting stories. The alu-minum guys are all convinced they have benefited materiallyfrom substitution away from copper into aluminum.&#34;[Copper] has been losing markets because of the price. Itjust takes a long time for that to happen,&#34; Mr. Bradford said.An example, he said, is the move toward plastic piping inhome construction.Mr. Skinner also said industry appears to be making someeffort to find substitutions for copper.He said his firm believes the economy won't slow as muchas some have forecast. If demand in other parts of the worldholds up, overall demand could increase &#34;marginally&#34; thisyear, he said.The key may be the level of Chinese imports, he said.&#34;The market is looking at that very carefully. The scrapsubstitution is also a key,&#34; Mr. Skinner said.While many analysts look for Chinese buying to pick upthis year, some caution it may not be as aggressive as someexpect. In particular, many suspect China has drawn downinventories that must now be rebuilt....=|||୦3ll 24%.

Accepted Answer

The demand curve for a product(, say, copper) shows a graphical framework between the product's…

1. Using demand and supply curves to show the impact of the events in the case on the price, supply and demand of copper. 2.What are the implications of these trends for managerial decision making?