... the price of the good to fall, Buffer stock scheme allows certain amount of the goods supply to be taken out of the market and hence stabilizes a certain price. Coffee, for example, is one of the most traded commodities. By using buffer stock system, it tries to keep the price stable by buying certain amount of supply when there is an oversupply and giving out the good to the market when there is not enough supply. In the short run, coffee will be relatively inelastic, because the supplier cannot shift to other goods in the short run. (producer substitute). *ceteris paribus is applied here: Assuming that the demand is constant! But in the long run, the coffee will be relatively elastic, because the producers then can respond to the changes in demand and allocate the resources to produce other goods which are more highly valued. But when the Buffer Stock ...

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