The Difference Between a Contango Market and a Backwardation Market

10. Buying and selling in more than one market to make a riskless profit is called

The position of the demand and supply curve will shift to the left or right following a change in an underlying determinant of the market. The number of oil people consume during this period decreased because after the change of the season, there will be less number of people willing to drive in winter. Complementary good, is a good 's demand is increased when the price of another good is decreased. Conversely, the demand for a good is decreased when the price of another good is increased. As transportation and Oil are complementary goods the demand of oil will also fall, which lead to the fall in price. It mean that the demand shifted to the left. Refer to Figure 1.

Supply is the total amount of a specific good that is available to the consumers. The supply of lobsters depends on the ocean temperature and since the ocean temperature is increasing, lobsters may once again come in a couple more weeks earlier than usual. In 2012, this caused the quantity of lobster to increase significantly, thus the supply curve shifted to the right. The shift caused the equilibrium price to decrease and the quantity to increase. On the other hand, if the ocean temperature is too low, then the lobster production rate is lowered. The supply curve will then shift to the left and cause the equilibrium price to increase and the quantity to decrease. The lobsterman cannot control the supply of lobsters since the production depends on the temperature. Another economic topic that came to my mind is the demand of a product. Demand is a consumer’s willingness to pay a price for a specific good. The demand curve would shift to the right if the price of the lobsters decreases due to mass production and vice

Price of other goods: there are two types of other products. First a substitute product which consumer will prefer because it is cheaper. The other type is complementary products which are always bough together (e.g. fish and chips). Example of substitute product is if Nike increased prices, Adidas demand will increase.

When there is a change of one of the factors of supply- like changes in the prices of production inputs like labour or capital; a change in production technology and its associated productivity change; or the amount of competition in a specific product market- there is a corresponding change in the supply curve. For example, if worker productivity improves due to some human capital or technology investment, then the costs of production decrease. This exerts a positive effect on the supply curve shifting it right, where the new market equilibrium is at a higher quantity and a lower price, holding everything else constant. There can also be a negative shift that moves the supply curve to the left, with the resulting market clearing price being higher and quantity lower, ceteris

When quantity supplied do not equal quantity demanded the outcome is either excess supply or excess demand, and a tendency for price to change. As this happen the consumers will increase their quantity demanded, and the movement toward equilibrium caused by excess supply is both the supply and demand sides. When the excess supply occur quantity supplied is greater than quantity demanded. While the reverse of excess demand quantity demanded is greater than quantity supplied. The excess demand pushes prices upwards in decreasing the quantity demanded and increasing the quantity supplied. This movement takes place along both the supply curve and the demand curve.

5. The potential product—which encompasses all the possible augmentations and transformations the product or offering might undergo in the future. These five elements constitute the buyers’ consumption system.

​Futures price is defined as the price at which the two participants in a futures contract agree to transact on the settlement date (Futures Price, n.d.). If I were to go into agreement to buy shares of

In economical terms, supply curve shifts to left due to government interference and price of

The question of what is a differential, can be answered very concisely even though it is a question many calculus students share. To put it simply, a differential is any function that relates a given function to its derivatives. However, do not let this relationship fool you into thinking that derivatives and differentials represent the same things. As Calculus and other mathematical studies have progressed through the years, the discoveries back in the seventeenth century by the inventors of calculus, Isaac Newton and Gottfried Leibniz, have been refined into a much better understanding. However, mathematicians have a history for being a little lazy when it comes to expanding pre-existing arguments. In this case, since a pre-existing argument for derivatives already existed, mathematicians created a way to tie in the idea of differentials in with the concepts of derivatives without necessarily creating a new valid argument for the understandings of differentials.

Backward integration is a type of vertical integration in which a company takes control over its suppliers. It is a form of acquisition of the intermediary players involved in supplying the raw materials used in the production process of the firm. Raw materials, intermediate manufacturing and assembly are controlled by the firm whereas distribution to the end customer is done by a third party company. In this way, company increases production efficiency and gains a competitive advantage by lowering its production cost.

commodity costs for commodities that can only be partially hedged, such as fluid milk, and high quality Arabica coffee;

Over the past decade, the ability of large financial institutions to accurately predict changes in the price of financial securities by using advanced technology has increased exponentially (Bloomberg). Specifically, the introduction of affordable geospatial satellite imagery has enabled investment managers to estimate crop yields, oil supply, and livestock quantities with low margins of error. This information is used to inform trading decisions, which often result in large profits (Woyke). While extremely useful, this technology is only available to a select number of institutions, as they have signed exclusivity and pricing agreements with the technology firms providing the data. These agreements prevent small investment funds and

What we are left with is pure profit at a Contango scenario as the futures are priced higher than spot prices for crude across the board.

DERIVATIVE is a transaction or contract whose value depends on or, as the name implies, derives from the value of underlying assets such as stock, bonds, mortgages, market indices, or foreign currencies. One party with exposure to unwanted risk can pass some or all of the risk to a second party. The first party can assume a different risk from a second party, pay the second party to assume the risk, or, as is often the case, create a combination. Derivatives are normally used to control exposure or risk.