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Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383

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BuyFindarrow_forward

Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383
Textbook Problem

The price of a given good is likely to be less variable with than without speculators. Explain.

To determine

The speculators and the price of goods.

Explanation

Assume that the price of good X is $40 from Monday to Thursday and it increases to $50 from Friday till Sunday without the speculators. Now, consider that the speculators are involved and they purchase good X on Monday at a lower price and sell the good on Friday at a higher price. The transaction of the speculators results in the reallocation of the goods from Monday to Thursday as the price difference is short lived...

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