Neco Model Questions Vol1 2018 Agricultural Science Question 32
Practice objective / multiple choice question 32 from the 2018 Neco Model Questions Vol1 Agricultural Science examination.
A farmer intends to cultivate maize on 5 ha. Fixed costs (land rent, equipment) amount to ₦150 000 per season. Variable cost is ₦20 000 per hectare for seed, fertilizer and labour. Expected yield is 4 tonnes per hectare. The market price per tonne is uncertain: with probability 0.6 the price will be ₦30 000, and with probability 0.4 it will be ₦15 000. The farmer can purchase a crop‑insurance policy that costs 5 % of the expected revenue (before insurance) and guarantees a minimum price of ₦20 000 per tonne. Should the farmer purchase the insurance? Show the expected profit with and without insurance and state the decision.
Answer Options
About This Question
This is Neco Model Questions Vol1 2018 Agricultural Science Question 32. It is one of the objective questions from the 2018 Neco Model Questions Vol1 Agricultural Science examination.
Difficulty level: Medium .
Master the Exam!
You've seen a preview, but there are thousands more questions plus AI tutor to break down complex solutions.