What are some risk management techniques used by farmers to reduce the uncertainty in farming?
What will be an ideal response?
Farmers use a number of risk management tools to control the risk inherent to farming. One tool is futures markets, where farmers can buy or sell farm products at a certain fixed price now for delivery at a specific future date. If prices should fall, the farmer benefits from being able to get the goods at reduced prices. If prices should rise, they can make revenue by selling the goods at higher prices.
Another tool is making contracts with processors. This way they can ensure they get a fixed price for their goods. Farmers can buy revenue insurance, which insures them for a certain level of revenue. They can also lease their land or work for other sources of income to insure their level of income.
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Some degree of unemployment is __________ in a complex economy
Fill in the blank(s) with correct word
Answer the following questions true (T) or false (F)
1. If the demand for a product is elastic, the quantity demanded changes by a smaller percentage than the percentage change in price. 2. If the absolute value of the price elasticity of demand for gasoline is 0.5, then a 10 percent increase in the price of gasoline leads to a 0.5 percent decrease in the quantity demanded. 3. If at a price of $10, a vendor sells 5 units of a product and at a price of $8, 6 units are sold. Using the midpoint formula, the demand for this good is inelastic.