A Farmer with $1000 Worth of Crops in the Field

question 70

Multiple Choice

A farmer with $1000 worth of crops in the field faces a .10 probability that a hail storm will destroy the value of her crop before she can harvest it.If she is risk averse,the most she would be willing to pay to insure against this loss is

• A) $0.
• B) $10.
• C) $100.
• D) $900.

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Definitions:

Demand Increased

A situation where the desire or need for a product or service rises, leading to potentially higher prices and/or increased production.

Quantity Demanded

The overall volume of a good or service that individuals are prepared and capable of buying at a given price.

Demand Decreased

A situation where the desire or need for a particular product or service declines.

Demand Increased

A situation where the desire to purchase goods and services at a given price level rises, leading to higher quantity demanded.