IX. MARKET METHODS AND PROBLEMS 



QUESTIONS 



i. What features distinguish the "exchange" from other forms of 

 market organization ? Is there a hard-and-fast line of demarcation ? 



2. Make a list of as many lines of farm products as you can find 

 handled by the exchange method. Are new commodities being added 

 to the list from time to time ? What characteristics must such com- 

 modities possess ? 



3. Explain the difference between "spot" and "future" transac- 

 tions. Why is future trading carried on? Did you ever hear of 

 future sales of eggs ? of apples ? of livestock ? Explain why or why 

 not in each case. 



4. How does a "bucket shop" differ from a "legitimate" ex- 

 change ? 



5. What practices does the regular produce exchange forbid? 

 Why? What power does it have with which to enforce its rules? 



6. What is a warehouse receipt? Explain the system under 

 which they are issued and the advantages resulting from their use. 



7. What arguments are brought forward to prove that exchange 

 dealing exerts a steadying influence on prices ? 



8. Would it be correct to say that the grain exchange is a market 

 mechanism which operates to keep the markets in different cities in 

 line with one another ? Explain the method by which this result is 

 accomplished. 



9. What is a basis contract? Suppose there were an abnormal 

 crop year, in which practically all the corn was of very inferior 

 grade; would the fixed differences of price provided by the Chicago 

 Board of Trade work equitably to all parties ? What results might 

 follow ? 



10. Can you suggest any other method by which basis contracts 

 might be settled ? What does the United States Cotton Futures act. 

 say on this subject ? 



n. Is it desirable to have national grades for staple farm pro- 

 ducts ? Why ? Do we have them at the present time ? How are 

 grades of apples, butter, and citrous fruit established ? 



12. What is a hedging contract and how is it used? Show how 

 the farmer could protect his business by hedging. 



13. What is a "bear" and why? a "bull"? 



14. Would a bear raid on the market be harmful to the producer ? 

 Will the appearance of a strong bull interest result in higher price* 

 to consumers ? 



42 



