Crop Insurance
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Questions and Answers

According to Chris Edwards, why can't farmers reduce risks by themselves in a marketplace?

  • Diversifying their planting locations is not a feasible risk reduction strategy
  • They may farm in places they otherwise wouldn’t with crop insurance subsidies (correct)
  • Buying financial contracts like forward contracts is not a reliable risk mitigation method
  • They are not aware of the risks involved in farming
  • What does Chris Edwards believe would happen if subsidies for crop insurance were withdrawn?

  • Farmers would expand their farming operations to more locations
  • Farmers would diversify their crops to a greater extent
  • Farmers would be more hesitant to farm environmentally sensitive lands (correct)
  • Farmers would not be affected by the withdrawal of subsidies
  • What is one concern raised by Chris Edwards about the impact of crop insurance subsidies on farmers' behavior?

  • Farmers may not be aware of the benefits of crop insurance
  • Farmers may not be able to afford farming in certain locations
  • Farmers may diversify their planting locations excessively
  • Farmers may tend to farm more environmentally sensitive and marginal lands (correct)
  • What is the main argument made by Chris Edwards regarding the treatment of farmers in comparison to businesses in other industries?

    <p>Farmers should not be treated differently than businesses in other industries</p> Signup and view all the answers

    What does Chris Edwards believe would happen if farmers know their losses will be covered at a subsidized rate?

    <p>They may farm places they otherwise wouldn’t, with crops they might not otherwise try</p> Signup and view all the answers

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