Which of the Following Is True for a Consumption Commodity

question 14

Multiple Choice

Which of the following is true for a consumption commodity?

• A) There is no limit to how high or low the futures price can be, except that the futures price cannot be negative
• B) There is a lower limit to the futures price but no upper limit
• C) There is an upper limit to the futures price but no lower limit, except that the futures price cannot be negative
• D) The futures price can be determined with reasonable accuracy from the spot price and interest rates

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Definitions:

Income Redistribution

The transfer of income from certain individuals or groups to others through mechanisms like taxation, welfare, and subsidies to promote economic fairness.

Incentives To Produce

Factors or motivations that encourage firms or individuals to engage in production, including profits, market demand, or regulatory conditions.

Stock Concept

A financial term referring to the ownership of shares in a company or the total value of goods available in inventory.

Flow Concept

Economic measures that are defined over a period of time, such as income or expenditure, contrasted with stock concepts measured at a point in time.