If farmers are concerned about the price of their future crop changing, they can:
A) plant more seeds today.
B) sell futures contracts to lock in a future price for their crop.
C) plant less today so that the price will be higher in the future.
D) buy futures contracts to lock in a future price for their crop.

Question

Quizplus · Accepted Answer

Selling futures contracts allows farmers to lock in a future price for their crop, reducing the risk associated with price fluctuations. Planting more or less seeds does not directly address the issue of price fluctuation, and buying futures contracts would not provide the desired outcome of locking in a future price.

If Farmers Are Concerned About the Price of Their Future