Given the Short-Run Instability of Farm Incomes, Many Farmers Use

question 101

Multiple Choice

Given the short-run instability of farm incomes, many farmers use some form of "hedging" to smooth out their incomes over time, including the following, except

• A) crop revenue insurance.
• B) futures markets.
• C) contracting with processors.
• D) forming a cartel to fix prices.

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Definitions:

Economic Model

A simplified representation or framework that economists use to describe and analyze economic processes, relationships, or phenomena.

Capital Goods

Long-lasting goods purchased and used by businesses to produce goods and services and contribute to their output.

Investment

The allocation of resources, often money, into assets or projects with the expectation of generating profit or income.

Marginal Costs

The increase in the sum total of expenses that comes with the production of one additional unit of a product or service.