Microeconomics 6th Edition by Robert Hall, Shirley Kuiper, Marc Lieberman

Exercise 7

In early 2011,even though cotton prices were high,cotton farmers in China began to hoard (rather than sell)most of the crop they had harvested,filling spare rooms and even living areas of their homes with cotton. Given the cost and inconvenience of storing large amounts of cotton rather than selling it,what could explain this behavior? [Hint: Review the section of this chapter on factors that shift the supply curve.] Could this behavior explain why cotton prices were high during this period? Explain,using the concepts of supply and demand