Explain How Speculation Tends to Smooth Prices Over Time and Increase

question 160

Essay

Explain how speculation tends to smooth prices over time and increase welfare. Use the model of demand and supply to illustrate your explanation.

---

Definitions:

Israel

Israel is a country in the Middle East, known for its significant historical, cultural, and religious importance to Judaism, Christianity, and Islam. Established in 1948, it is a democratic state and a center of ongoing geopolitical conflict, especially with Palestine.

Labor Costs

The total expenses incurred by employing workers, including wages, benefits, and taxes.

Productivity Decline

A reduction in the efficiency at which labor, capital, and other inputs produce output, often measured by output per hour worked.

Manufacturing

The process of producing goods on a large scale using labor, machines, tools, and chemical or biological processing or formulation.