Buffer Stocks Quiz

What is the primary purpose of a buffer stock scheme?

• To increase the supply of a commodity indefinitely

• To stabilize the price of a commodity

• To decrease the demand for a commodity

• To permanently remove excess supply from the market

How does a buffer stock scheme operate?

• By fixing the price of a commodity at a certain level

• By only buying the commodity when there is a shortage

• By buying excess supply of the commodity when the market is oversupplied and releasing it when supply falls short

• By subsidizing the production of a commodity

What is the primary purpose of a buffer stock scheme?

• To increase the price of a commodity

• To stabilize the price and supply of a commodity

• To decrease the supply of a commodity

• To privatize the production of a commodity

What does a buffer stock scheme involve the creation of?

• A deficit

• A surplus

• A stockpile or buffer stock

• A monopoly

How does a buffer stock scheme operate?

• By selling a commodity when there is a high demand

• By buying a commodity when there is a low supply

• By buying excess supply and releasing it when supply is low

• By permanently storing excess supply

Who can own and manage the buffer stock?

• Only the government

• Only a central agency

• Only a group of producers or traders

• The government, a central agency, or a group of producers or traders

What does the label "D1" on the graph most likely represent in the context of a buffer stock scheme?

• Demand at year 1

• Demand after intervention

• Initial demand before buffer stock

• Supply curve

What does the diagram primarily illustrate in the context of a buffer stock scheme?

• The relationship between supply and demand for cocoa

• The process of photosynthesis in cocoa plants

• The historical prices of cocoa over the past decade

• The nutritional value of cocoa in different quantities

What does the vertical axis in the diagrams represent?

• Quantity traded

• Price of cocoa (US$ per tonne)

• Demand for cocoa

• Supply of cocoa

What does the label "D1" on the diagrams indicate?

• Price level

• Quantity level

• Demand curve

• Supply curve