Gce Model Questions Vol1 2024 Agricultural Science Question 18
Practice objective / multiple choice question 18 from the 2024 Gce Model Questions Vol1 Agricultural Science examination.
A farmer intends to grow wheat on 20 ha. Fixed costs (land, machinery) are $12 000 per season and variable costs are $150 ha⁻¹. Expected yield is 4 t ha⁻¹. The market price is uncertain: with probability 0.6 the price will be $250 t⁻¹ and with probability 0.4 it will fall to $180 t⁻¹. The farmer may buy crop‑insurance that costs 5 % of the expected revenue (based on the $250 price) and guarantees a minimum price of $200 t⁻¹. Using the expected‑value decision rule, should the farmer purchase the insurance? Show the expected profit with and without insurance.
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About This Question
This is Gce Model Questions Vol1 2024 Agricultural Science Question 18. It is one of the objective questions from the 2024 Gce Model Questions Vol1 Agricultural Science examination.
Difficulty level: Hard .
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