Spot and futures markets for good

Assignment Help Financial Management

Reference no: EM131303779

You are to answer only six of them Mark the two you choose not to have graded. For each of the remaining questions you have two options: (1) you may tell me not to grade it and receive an automatic two points, or (2) answer it in a few well-chosen sentences. If you use graphs or math, be sure to tell me exactly what everything stands for. Continue long answers on the back of the page.

1. ___DO NOT GRADE There formerly were both spot and futures markets for good X, but now the futures market is closed. This can’t make you worse off, since you are a small consumer of X and not a speculator who operates in the futures market. Right? Explain.

2. ___DO NOT GRADE A certain perfectly competitive market has a flat long-run supply curve. Starting from long-run equilibrium, trace the short-run and long-run effects of an increase in fixed costs that applies to every firm. Hint: marginal cost doesn’t move, but average cost does.

Reference no: EM131303779

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