Stan, a Soybean Farmer, Acts to Prevent Crop Failure

question 3

Multiple Choice

Stan, a soybean farmer, acts to prevent crop failure. The marginal benefit is represented by MB = 80 - A, where A is the number of precautions. The marginal cost of these precautions (e.g., soil preparation and pesticide and fertilizer use) is MC = 20 - 0.5A. Suppose the government offers Stan crop insurance, which changes the marginal benefit of taking precautions to MB = 65 - 2A. The number of precautions Stan takes _____ from _____ without insurance to _____ with insurance.

• A) falls; 20; 3
• B) falls; 40; 20
• C) falls; 120; 30
• D) rise; 60; 140

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Definitions:

Connecting Points

The process or technique of determining a path or drawing a line between multiple points in a space.

Option

In finance, it refers to a contract which gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a specified price on or before a specified date.

Observations

Data points or individual pieces of information collected during a study or research.

Simple Linear Regression

An analytical technique that utilizes a linear equation to depict the connection between a single independent variable and a dependent variable.