Comment on How much does consumption affect production?

Tue, 06 Jan 2015 18:42:29 GMT

a constant price

So what you are basically saying is that in the long run the price will be driven close to the lowest average price -- right?

As a result, on expectation these perturbations average to zero, and the argument holds.

Still not quite, as once you recognize that "perturbations" will happen, you need to engage in some risk management (zero mean does not imply zero volatility). In your scenario the chicken producer seems to be fine with the 50% chance of going bankrupt at the delivery time which isn't a good assumption to make.

Discuss