Social Sciences, asked by janvimalhotra, 1 year ago

among the producer trade and the consumer who do you think has maximum possibility of getting exploited and why

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Answered by bharti8442
1
Among the producer, the trader and the consumer who do you think has the maximum possibility of getting exploited?

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3 ANSWERS



Prashanth Angani, Founder of Spotalpha.com, Entrepreneur, Investor and Mentor

Answered Nov 15, 2017 · Author has 312 answers and 543.2k answer views

I believe the ‘Producer’ has the maximum possibility of getting exploited while the ‘Trader’ has the minimum possibility of getting exploited. The ‘Consumer’ on the other hand constantly adapts to new market equilibrium.
Here’s why:
The ‘Trader’ is information efficient - he sees both supply and demand and matches it. The trader ‘makes’ the market, he can also predict future prices based on past trends and use this to manipulate prices by creating false surge / drought in supply / demand. Finally, the trader only ‘makes’ the trade (matches supply and demand) if there is an incentive.
The ‘Consumer’ has the power of choice. The consumer adapts his habits based on Price set by the trader. I.e: If Price is not affordable, he shifts to a lower price alternative. (e.x: If Wool becomes expensive switch to Cotton based products.)
The ‘Producer’ on the other hand has no bargaining power. He starts producing with the hope that the trader will buy it at an appropriate price. I.e: Cost and Quality of production is what he can control, not Price

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