The User of a Commodity Who Is Trying to Insure

question 22

Multiple Choice

The user of a commodity who is trying to insure against the price of the commodity rising would:

• A)Take the short position in a futures contract.
• B)Take the long position in a futures contract.
• C)Be better off speculating on price movements and earning higher profits.
• D)Want to hedge by selling a futures contract.

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Definitions:

Fossil Fuel Burning

The combustion of coal, oil, gas, or other fossil fuels to produce energy, resulting in the emission of greenhouse gases and other pollutants.

Industrial Revolution

A period of major industrialization from the late 1700s to the early 1800s that transformed largely agrarian societies into industrialized ones.

Population Growth

Population growth is the increase in the number of individuals in a population due to factors such as birth, immigration, and decreasing death rates.

Persistent Inflammation

Long-term, chronic inflammation that can lead to various diseases and health issues if left unaddressed.