A Bakery Generally Enters into a Forward Contract in Wheat

question 2

Multiple Choice

A bakery generally enters into a forward contract in wheat as a:

• A)hedger.
• B)speculator.
• C)spot trader.
• D)broker.
• E)spectator.

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Definitions:

Trade Better Off

The idea that parties involved in voluntary trading are better off as they satisfy each other's needs or wants.

Absolute Advantage

The ability of an entity to produce a good or service more efficiently than its competitors with the same amount of resources.

Production Possibilities

The various combinations of goods and services that can be produced using all available resources and technology.

Opportunity Cost

The cost of foregoing the next best alternative when making a decision, representing the benefits one misses out on when choosing one option over another.