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Rice and Potatoes Are Substitutes in Consumption

question 35

Multiple Choice

Rice and potatoes are substitutes in consumption.If the price of rice rises and there is a bumper crop of potatoes,in the market for potatoes one would expect the equilibrium price to _____ and the equilibrium quantity to _____.


Definitions:

Long Corn Futures

An investment position that speculates on the future price increase of corn by purchasing corn futures contracts.

Delivery Date

The specific date on which a financial transaction or agreement is scheduled to be concluded.

Maintenance-Margin

The minimum amount of equity that must be maintained in a margin account to continue holding positions, preventing a margin call.

Margin Call

A demand by a broker that an investor deposits further cash or securities to cover possible losses.

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