You Own 450,000 Bushels of Wheat

question 24

Multiple Choice

You own 450,000 bushels of wheat. If you decide to add a short futures position in wheat you will be taking which one of the following positions?

• A)short hedge
• B)long hedge
• C)program trade
• D)short arbitrage
• E)long arbitrage

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Definitions:

Fixed Costs

Business expenses that are not affected by changes in the level of production or sales, such as rent and salaries.

Total Variable Costs

The sum of expenses that change directly with the level of output or production volume.

Average Fixed Cost

The total fixed costs of production divided by the number of units produced, indicating cost per unit.

Average Total Costs (ATC)

The total cost of production (fixed plus variable costs) divided by the total quantity of output produced.