When speculators buy gasoline during the low demand spring in order to sell it during the high demand summer, they cause an increase in dead weight loss in the spring that is more than made up for by an increase in social surplus in the summer.

Question

Quizplus · Accepted Answer

Speculators buying gasoline in the spring to sell in the summer can actually reduce deadweight loss by smoothing prices over time, leading to a more efficient allocation of resources and potentially increasing social surplus by stabilizing supply and demand across seasons.

When Speculators Buy Gasoline During the Low Demand Spring in Order