What Is a Futures Contract? How Do They Differ from Forward

question 79

Essay

What is a futures contract? How do they differ from forward contracts? Explain the positions that can be established in a futures contract and how they are used by traders.

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Definitions:

Price Discrimination

The strategy of selling the same product at different prices to different groups of consumers, based on their willingness to pay.

Economic Profit

The total revenue of a firm minus its explicit and implicit costs, essentially measuring the excess beyond the break-even point.

Price Discrimination

Price Discrimination occurs when a seller charges different prices for the same product or service to different customers, based on factors other than the cost of production.

Individual Demand

The quantity of a good or service that a single consumer is willing and able to purchase at various prices.