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Q1.
A speculator is someone who "buys low and sells high"(我諗即係中間人 OR 買黃牛飛的人?!) to make a profit. He os not a final user of the good.
(a) How will a speculator's activity in the oil market affect the demand and /or supply of oil during period if expected relative high prices and periods if expected relative low prices? ( assume he does not attemp to create false signals. He just tries to make money by guessing future oil prices)
(b) Based on yr ans in (a), do u think speculators will make prices more stable or less stable?
(c) Now suppose a speculator tries to create an expectation that oil is in relatively GREATER scarcity ( when in fact he does not really believe this is the case); and then when the price rises to a certain level, he selld in previous holdings in oil. Will his activities make prices more stable or less stable?
(d) Comment on whether activties describled in (c) will succeed.