1. It is August 10 and Farmer John is making final estimates of this year's wheat crop. His production is turning out to be much better than expected. This causes concern because if his production is better than expected, other farmers must be experiencing the same situation. The current spot price is $2.25 per bushel, and the September wheat futures (5000 bushels per contract) price is $2.52 per bushel. At the current spot price, Farmer John would just break even with his anticipated 60,000 bushels. His wheat will not be readv to harvest until September. a) What can Farmer John do to ensure his profitability? Is this a long or a short hedge? b) At harvest time in September, Farmer John's concerns are realized in that the cash price has dropped to $1.70 per bushel. Compute Farmer John's net wealth change due to the drop in wheat prices, assuming he hedged his anticipated production and his final yield was 60,000 bushels. c) Suppose the Farmer John's production turned out to be 50,000 bushels. Compute his net wealth change