A large agribusiness firm has contracted to deliver 100 000 bushels of tomatoes for $4.50 a bushel at the end of August.On the delivery date, the spot price of tomatoes is $4.70 per bushel.Which of the following is true?

Question

Quizplus · Accepted Answer

The seller of the contract must sell the tomatoes at the agreed price of $4.50 per bushel instead of the higher spot price of $4.70, resulting in a loss compared to the spot market. The buyer benefits from purchasing at the lower contract price, thus making a profit.

A Large Agribusiness Firm Has Contracted to Deliver 100 000