We begin by considering the role of speculative markets. Speculation involves the buying and selling of assets or commodities with the purpose of making profits’ from the fluctuations in prices. Generally, a speculator buys an asset with an eye to selling it later for a profit when the price has risen; sometimes speculators may sell assets which they think are overpriced The asset might be grain, oil, eggs, Internet stocks, or Russian rubles. Speculators are not interested in using the product or making something with ‘ it, Rather, they make a profit from price changes. The last thing they want is to see the egg truck roll up to their door Speculation is a risky activity, however, and even experienced speculators sometimes lose their fortunes by making bad guesses.

Why might speculation be beneficial to society? The economic function of speculators is to “move” goods from periods of’ abundance to periods of scarcity where the “move” will be across space, time, or uncertain states of nature. Even though speculators-may never see a barrel of oil or a truckload of eggs, they can help even out the price differences of these commodities among regions ‘Or over time. They do this by buying when goods area and prices ate low and selling when goods ,are scarce and prices are high.

[av_button label='Get Any Economics Assignment Solved for US$ 55' link='manually,http://economicskey.com/buy-now' link_target='' color='red' custom_bg='#444444' custom_font='#ffffff' size='large' position='center' icon_select='yes' icon='ue859' font='entypo-fontello']

Share This