A Farmer Stores His Fall Harvest of Corn and Sells

question 37

Multiple Choice

A farmer stores his fall harvest of corn and sells corn futures for March delivery at $2.50 per bushel.In March the spot price of corn is $2.20 per bushel.Which of the following is correct?

• A) The farmer is obligated to deliver corn to the futures buyer at $2.20.
• B) The farmer has locked in an effective price of $2.50 per bushel.
• C) The farmer would have been better off without the futures contact.
• D) The farmer will receive $4.70 per bushel, which more than doubles the profit obtained without futures.

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Definitions:

Bee Sting

An injury caused by the sting of a bee, injecting venom that can cause pain, swelling, and in some cases, allergic reactions.

Classical Conditioning

A method of learning that happens by associating a stimulus found in nature with one introduced from the environment.

CS (Conditioned Stimulus)

A previously neutral stimulus that, after being paired with an unconditioned stimulus, elicits a conditioned response.

UCS (Unconditioned Stimulus)

In classical conditioning, an unconditioned stimulus is something that naturally and automatically triggers a response without any learning needed.