Waec Model Questions Vol1 2023 Agricultural Science Question 23
Practice objective / multiple choice question 23 from the 2023 Waec Model Questions Vol1 Agricultural Science examination.
A farmer intends to cultivate maize on 5 ha. Variable cost is ₦120 000 per ha and fixed cost is ₦250 000. Expected yield is 3.5 t ha⁻¹. The expected market price is ₦45 000 t⁻¹, but there is a 30 % chance the price will fall by 40 % (to ₦27 000 t⁻¹) and a 70 % chance it will stay at the expected price. The farmer can buy crop insurance that costs 3 % of the expected revenue (without insurance) and guarantees a minimum price of ₦35 000 t⁻¹ if the market price falls below that, paying the shortfall per tonne. Should the farmer purchase the insurance? Show the expected profit with and without insurance and state the decision.
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About This Question
This is Waec Model Questions Vol1 2023 Agricultural Science Question 23. It is one of the objective questions from the 2023 Waec Model Questions Vol1 Agricultural Science examination.
Difficulty level: Hard .
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