If Speculators Expect the Future Price of a Commodity to Rise

question 7

Essay

If speculators expect the future price of a commodity to rise, they may decide to use the ―buy low, sell high‖ strategy where they buy the commodity at a low price today in order that they may sell it later when prices rise. How might their actions actually cause a self-fulfilling prophecy in the short run? Use a demand and supply graph in your answer.

Understand the conditions and forms under which stock can be issued.

Learn about the role of dividends and retained earnings within a corporation.

Comprehend the legal and financial separation between a corporation and its stockholders.

Understand how corporate shares influence the rights and responsibilities of stockholders.

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Definitions:

Opportunity Cost

The expense incurred by not selecting the second-best choice available when deciding between multiple options.

Consumer Goods

Products and services that are purchased for consumption by the average household or end user, rather than for the purpose of resale or further processing.

Capital Goods

Are tangible assets such as buildings, machinery, equipment, vehicles, and tools that an organization uses to produce goods or services.

Production Possibilities Curve

A graphical representation that shows the maximum quantity of one good that can be produced for every possible quantity of another good produced, given the available resources and technology.