Platinum Market Seen Near Million-Ounce Deficit Amid Supply Shortage

EconEye Admin

3 years ago

The platinum market is forecast to move to a nearly one-million ounce shortage in 2023. Automakers are creating an upswing in demand as they substitute platinum for palladium in autocatalysts. Three-quarters of mined platinum comes from South Africa, where electricity shortages have significantly curtailed the refining.—wsj.com

Answer the following questions to check your understanding of the story.

1) Why is the platinum market experiencing a shortage in 2023?

The shortage is occurring because _______________.

a) the demand for platinum is decreasing and the supply of platinum is increasing

b) the demand for platinum is increasing and the supply of platinum is decreasing

c) the demand for platinum is increasing by less than the supply of platinum is increasing

d) the demand for platinum is decreasing by more than the supply of platinum is decreasing

Wrong! - Are automakers increasing or decreasing the demand for platinum? When South Africa experiences electricity shortages, does the supply of platinum increase or decrease?

Good Job! - Automakers are increasing the demand for platinum and electricity shortages in South Africa are decreasing the supply of platinum. When demand increases and supply decreases, a shortage occurs.

2) What will happen in the platinum market when the shortage arises?

a) The price will rise, the quantity demanded will increase, and the quantity supplied will decrease.

b) The price will rise, the quantity demanded will decrease, and the quantity supplied will increase.

c) The demand will decrease, the supply will increase, and the price will return to its original level.

d) The price will fall, the quantity demanded will increase, and the quantity supplied will decrease.

Wrong! - When the shortage arises, what is the relationship between the quantity demanded and the quantity supplied? How does the price change to move the market to equilibrium?

That's Right! - When the shortage arises, the quantity demanded exceeds the quantity supplied. As the price rises, the quantity demanded decreases, the quantity supplied increases, and the shortage is eliminated.

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