How do speculators mitigate shortfalls in the equilibrium quantities traded in markets?
A) by buying up unsold inventories and then selling them when there is a shortage in the market
B) by causing market quantities to rise and fall
C) by buying up items when the prices have risen
D) by buying up items in advance of rising prices, and then selling them in the market when prices increase

Question

Quizplus · Accepted Answer

Speculators can mitigate shortfalls in equilibrium quantities traded in markets by buying up items in advance of rising prices, and then selling them in the market when prices increase. This can help to stabilize the market and ensure that there is enough supply to meet demand. This strategy may involve some risk, as prices may not always rise as expected, but it can be an effective way to prevent shortages and ensure that markets remain efficient.

How Do Speculators Mitigate Shortfalls in the Equilibrium Quantities Traded