Futures Markets Are Often Good Predictors of What Will Happen

question 112

Multiple Choice

Futures markets are often good predictors of what will happen to the price of goods in the future because:

• A) speculators typically have better information than consumers.
• B) the markets are more complete.
• C) speculators have an incentive to "get it right" because their own money is on the line.
• D) the markets are highly regulated.

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Definitions:

Joint Profits

The combined earnings or profits generated by a partnership or collaboration between two or more entities or firms.

Non-collusive Oligopolist

A firm in an oligopoly market structure that independently sets prices or output levels without engaging in explicit agreements with rivals.

Equilibrium Price

The price at which the quantity of a good or service supplied equals the quantity demanded, resulting in no surplus or shortage in the market.

Equilibrium Quantity

The quantity of goods or services supplied and demanded at the equilibrium price, where market supply and demand balance each other.