If the Price of a Futures Contract Increases, Then

question 78

Multiple Choice

If the price of a futures contract increases, then

• A)the exchange will collect the amount of the increase from the seller of the contract and transfer it to the account of the buyer of the contract.
• B)the exchange will collect the amount of the increase from the buyer of the contract and transfer it to the account of the seller of the contract.
• C)the exchange will collect the amount of the increase from both the buyer and the seller and place it in escrow until the delivery date.
• D)the additional funds will be required from either the buyer or the seller until the delivery date.

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Definitions:

Supply Curve

A graphical representation showing the relationship between the price of a good and the quantity of that good that suppliers are willing to produce and sell.

Efficient Output

The maximization of output using the least amount of inputs or resources.

Perfect Competitor

Refers to a theoretical market structure where numerous small firms compete against each other with no single company influencing the market price or supply of a product.

Standardized Product

Goods or services that are uniform in quality and performance, allowing them to be interchangeable, which facilitates mass production and broad market acceptance.