Explain how the purchase of futures contracts can help to insure a farmer against adverse swings in the prices of the crops that he grows
To avoid the risk of lower prices in the future, a farmer can enter into a futures contract with someone who will guarantee to take delivery of the crop in the future for a stated price. The farmer then shifts the risk of price fluctuations onto the purchaser of the futures contract, which helps to stabilize his future income.
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According to Coase's analysis, when are private costs and social costs the same?
a. Always. b. When there are no transactions costs. c. When property rights are clearly defined. d. Never.
Intel and AMD are a duopoly that produces CPU chips. Intel and AMD can conduct R&D or they cannot conduct R&D. The table above shows the payoff matrix for the two firms. AMD is playing a tit-for-tat strategy and Intel did not conduct R&D last
Then, of the following answers, Intel's total profit for the next two periods is the highest if Intel ________ R&D this period and ________ R&D next period. A) conducts; conducts B) does not conduct; conducts C) conducts; does not conduct D) does not conduct; does not conduct E) conducts; either conducts or does not conduct because the profit is the same in either case
What does a production possibility frontier represent?
What will be an ideal response?
Refer to Figure 11-1. Using the per-worker production function in the figure above, the largest changes in an economy's standard of living would be achieved by a movement from
A) A to B to C. B) C to B to A. C) B to C to D. D) D to C to B.