If the Producer of a Product Has Entered into a Fixed

question 14

Multiple Choice

If the producer of a product has entered into a fixed price sale agreement for that output,the producer generally faces:

• A)a nice steady profit because the output price is fixed.
• B)an uncertain profit if the input prices are volatile.This risk can be reduced by a short hedge.
• C)an uncertain profit if the input prices are volatile.This risk can be reduced by a long hedge.
• D)a modest profit if the input prices are stable.This risk can be reduced by a long hedge.
• E)a modest profit if the input prices are stable.This risk can be reduced by a short hedge.

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Definitions:

Substantial

Something of considerable importance, size, or worth.

Segmentation

The process of dividing a market into distinct groups of buyers with different needs, characteristics, or behaviors, which might require separate products or marketing strategies.

Targeting

The process used by businesses to focus their marketing efforts on a specific audience or market segment.

Positioning

A marketing strategy that aims to establish a brand or product in the mind of consumers, distinguishing it from competitors.