If Speculators Expect the Future Price of a Commodity to Rise

question 37

Essay

If speculators expect the future price of a commodity to rise, they may decide to use the "buy low, sell high" strategy in which they buy the commodity at a low price today in order that they may sell it later when prices rise. How might their actions actually cause a self-fulfilling prophecy in the short run? Use a demand and supply graph in your answer.

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Definitions:

Tons of Rice

A unit of measure indicating the quantity of rice, often used in trading and economic analysis related to agricultural commodities.

T-shirts

T-shirts are a staple clothing item made from fabric, characterized by their T-shaped body and sleeves, commonly worn by people of all ages and genders.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision or choosing to allocate resources in one way rather than another.

Tons of Rice

Tons of rice refer to a measurement of rice quantity, often used in the context of agricultural production and trade statistics.