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Every year this apple farmer produces one million pounds of apples. But hes got a problem. Every year the apple price jumps around a bunch. Sometimes it sells after the harvest for over $0.30, and this guy makes a ton of money per pound. And then sometimes it drops down to $0.10 per pound, and this guy cant even cover his costs. And on the other side of the equation, you have this pie chain right over here. So they specialize in making apple pies. And when the price of apples goes super high, these guys cant cover their costs. They start running a loss. But when the price goes really low, they have this kind of bonanza. But neither party here likes this scenario. They dont like the unpredictability of one year having a feast and then one year having a famine. So what they can do is, lets say we have the harvest coming up. The pie farmer is kind of afraid. Well, what if the price of pies goes back down to $0.10 per pound? Then hes going to go broke. The pie chain is afraid. What