International Economics 15th Edition by Robert Carbaugh

International commodity agreements play a crucial role in the global economy, especially for emerging nations. In the book “International Economics 15th Edition” by Robert Carbaugh, Chapter 07 delves into the significance of these agreements and the factors that influence their formation. Let’s explore some key questions and answers from the chapter:

1. What factors encourage emerging nations to form international commodity agreements?

Emerging nations are encouraged to form international commodity agreements due to inelastic commodity supply and demand schedules, export markets prone to instability, and the need to mitigate commodity price fluctuations.

2. What is not a characteristic of international commodity agreements?

International commodity agreements do not include export cutbacks to counter rising commodity prices. Instead, they focus on market stability for consuming and producing nations by utilizing buffer stocks and stabilizing commodity prices.

3. What do empirical estimates suggest about the price elasticities of commodities?

Empirical estimates indicate that most commodities have inelastic supply schedules and demand schedules, highlighting the need for interventions like international commodity agreements to stabilize prices and prevent extreme fluctuations.

4. How does an increase in the supply of a commodity with an inelastic demand schedule impact prices and sales revenue?

If the demand schedule for a commodity is relatively inelastic, an increase in its supply would lead to a decrease in price and sales revenue, highlighting the complex relationship between supply, demand, and pricing in commodity markets.

5. What is a primary goal of international commodity agreements?

One of the main objectives of international commodity agreements is to moderate commodity price fluctuations during market instability, ensuring stability for member countries and stakeholders involved in the commodity trade.

These questions and answers provide insights into the dynamics of international commodity agreements and their impact on emerging nations and the global economy.

**FAQs**

Q: Where can I find test banks for other subjects?
A: You can find a variety of test banks for different subjects and textbooks online through reputable sources.

Q: How do international commodity agreements benefit participating nations?
A: International commodity agreements help stabilize commodity prices, ensure market stability, and provide a framework for cooperation among participating nations.

Q: Are international commodity agreements effective in the long term?
A: The effectiveness of international commodity agreements may vary, but they serve as important mechanisms for addressing price volatility and market disruptions in the short to medium term.

In conclusion, international commodity agreements are essential for managing the challenges faced by emerging nations in the global commodity market. By understanding the factors that drive the formation of these agreements and their impact on market dynamics, countries can work together to achieve stability and sustainable growth in international trade.