Manufacturers often enter into forward contracts with sellers of inputs for delivery of parts (or inputs) at a specified price with delivery in the future. For example, a steel tube manufacturer may agree in January of the year to buy a given quantity (say 1,000 tons) of steel from a steel producer for $50 a ton to be delivered in September of the year.

A. Show in a diagram, two market changes (you can show both in one diagram) that could induce the steel maker (the seller) to breach efficiently? When this occurs, how should expectation damages be computed?

B. Show in a diagram, two market changes (you can show both in one diagram) that could induce the steel pipe maker (buyer) to breach efficiently? When this occurs, how should expectation damages be computed?