PHYSICS 102 Lecture Notes - Lecture 14: Futures Contract, Aggregate Supply, Time Series
Document Summary
1. 1 demand forecasts: firms need to distinguish between overall market demand (and how much they capture of it) & firm- level demand (which is influenced by overall market demand) 1. 2 supply forecasts: supply forecasts as important as demand forecasts, because interruption can break flow of goods, provide info on number of products & supplier, aggregate supply levels, trends affecting supply. 1. 3 price forecasts: firms need to forecast prices in order to decide when to purchase, commodity prices expected to increase: a) forward buying b) use futures contract. Futures contract: legal agreement to buy or sell commodity at future date at price that is fixed at time of agreement: commodity prices expected to fall: a) buy more frequently in smaller amounts, laws of forecasting. 2. 1 law 1: forecasts are almost always wrong: no forecasting approach can predict exact level, but it gets close estimates so still useful.
