If the Producer of a Product Has Entered into a Fixed

question 50

Multiple Choice

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

---

Definitions:

Manufactured

The process of producing goods on a large scale using labor and machinery.

Lynching

Lynching refers to the illegal execution of an individual by a mob, typically by hanging, without legal trial, often motivated by racial prejudice.

Black Farm Workers

Agricultural laborers of African descent, who may face unique challenges and disparities in working conditions and opportunities.

Cotton Industry

A sector of the economy focused on the production, processing, and distribution of cotton, historically important to the textile industry.