(Consider This) Which of the following methods is commonly used by farmers to "smooth" income over time?

Question

Quizplus · Accepted Answer

Entering contracts with buyers of their farm output to assure themselves of a fixed price is a commonly used technique by farmers to "smooth" income over time. This helps them to hedge against short-run price and output fluctuations, as they have a fixed price agreement with the buyer. Options A and B are not effective methods to manage price and output fluctuations, as they may lead to an over-reliance on one crop or landowner, respectively, which could increase risk. Option D is not the best choice, as it includes all the given options, which may not necessarily be equally effective or commonly used by farmers.

(Consider This) Which of the Following Methods Is Commonly Used