(Consider This) Which of the following methods is commonly used by farmers to "smooth" income over time?
A. Producing only one crop to benefit from specialization.
B. Renting land from other farmers to increase production.
C. Entering contracts with buyers of their farm output to assure themselves of a fixed price.
D. All of these risk-management techniques are used to hedge against short-run price and
output fluctuations.
Answer: C
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All the following actions represent fiscal policy EXCEPT
A) an increase in government spending. B) a reduction in individual income tax rates. C) a reduction in the money supply by the Federal Reserve. D) an increase in corporate income tax rates.
The size of a country's "economic pie" is thought of as the total dollar value of all goods and services produced during some period of time. The economic pie
a. is a fixed total waiting to be divided up among people. b. determines how much wealth an individual can obtain. c. is variable, not fixed, across time periods. d. depends solely upon the natural resources of a country.