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Author Question: A farmer who sells September corn futures at the time he plants his corn in May is A) competing ... (Read 127 times)

james9437

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on: Jun 29, 2018
A farmer who sells September corn futures at the time he plants his corn in May is
 
  A) competing against speculators, who profit from price fluctuations.
  B) increasing his risk from price fluctuations.
  C) reducing his risk from price fluctuations.
  D) reducing or increasing his risk from price fluctuations, depending on what subsequently happens to the price of corn.

Question 2

Is it true that in the long run it is impossible for firms functioning in a perfectly competitive market to earn positive economic profits? Explain your answer.
 
  What will be an ideal response?


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dudman123

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Reply #1 on: Jun 29, 2018
Answer to Question 1

C

Answer to Question 2

No, even in a perfectly competitive market, firms may earn positive economic profits in the long run. This happens when firms do not have identical cost structures. For example, whenever there is an increase in demand for a good in the market, the price of the good goes u


james9437

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Reply 2 on: Jun 29, 2018
Great answer, keep it coming :)

tranoy

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Reply 3 on: Yesterday
Excellent

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