1. Flashcards
1
Q
Why the process of speculation in food commodities is useful?
A
- Producers like to reduce their risks by selling in advance.
- Consumers like to reduce their risks by buying spot - immediate delivery.
- Speculators assume some of the risks in the supply chain that producers and consumers are happy to lay off.
They perform a useful function. The process works better with them than without them.
2
Q
2 functions of speculators?
A
Add liquidity to the market
Absorb some of the risk
