# What are the three options farmers (as price takers) have to manage price risk? Contracts, Negotiation,...

###### Question:

What are the three options farmers (as price takers) have to manage price risk? Contracts, Negotiation, Hedging Contracts, Hedging, Insurance Contracts, Branding, Bargaining
Look at the graph below. Which of these farmers is the most risk averse? Option 3 Expected return Farmer A Option 2 Option 1 Farmer B Risk Farmer A as, for the same risk, he needs a higher expected return than Farmer B Farmer B as, for the same risk, he needs a higher expected return than Farmer A
Look at the graph below. What is the decision of Farmer A regarding the option 2? Option 3 Farmer A Expected return . Option 2 Option 1 Farmer B Risk He does not take it as the expected return is lower than its own minimum return for the risk He takes it as its expected return is higher than the option 1
Look at the graph below. What do you think about the option 3? Option 3 Expected return Farmer A Option 2 Option 1 Farmer B Risk All farmers will take the option 3 Only Farmer A will take the option 3 Only Farmer B will take the option 3

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