Consider a Potato Farmer Whose Cost of Production Is $2

question 34

Multiple Choice

Consider a potato farmer whose cost of production is $2.25 a bushel.In May,she expects that the potato when harvested in July will sell for either $2 a bushel or $3.00.She could avoid the probability of a loss by contracting to deliver the potatoes in July at $2.50.Such a contract is traded in a

• A) futures market.
• B) spot market.
• C) portfolio market.
• D) diversified market.