Future Business Leaders of America (FBLA) Agribusiness Practice Test

Which of the following is NOT a benefit of using futures markets?

1. Price certainty for sellers

2. Guaranteed sales volume

3. Mitigated risks in pricing

4. Improved supply chain efficiency

The correct answer is: Guaranteed sales volume

The choice indicating guaranteed sales volume is correct because futures markets primarily facilitate price discovery and risk management rather than ensuring that a specific volume of goods will be sold. In essence, futures contracts allow producers and consumers to lock in prices for commodities at a future date, which helps them manage price volatility. However, they do not guarantee that the agreed-upon volume of product will be sold. Price certainty for sellers is a primary benefit of futures markets, as it allows them to protect themselves against fluctuations in market prices. Mitigating risks in pricing is another key feature, as futures contracts provide a way to hedge against potential declines in price. Improved supply chain efficiency can also be a benefit since futures markets can lead to better planning and coordination among producers, processors, and retailers. However, none of these aspects assure a guaranteed volume of sales, making that statement distinctly not a benefit of using futures markets.