An increase in the futures price of milk is an indication that the:
A) supply of milk will increase in the future.
B) price of milk is expected to rise.
C) opportunity cost of milk is higher today than it will be in the future.
D) price of milk is expected to fall, and hence speculators would prefer to buy it in the future.

Question

Quizplus · Accepted Answer

An increase in the futures price of milk indicates that the market expects the price of milk to rise in the future. This could be due to factors such as an expected increase in demand for milk or a decrease in supply. Investors may choose to purchase milk futures in anticipation of this increase in price, which would drive the futures price up.

An Increase in the Futures Price of Milk Is an Indication