Question
Consider a farming company Crop Corporation which cultivates two types of vegetables, i.e. tomatoes and corn. Since the prices of the vegetables fluctuate, the company
Consider a farming company Crop Corporation which cultivates two types of vegetables, i.e. tomatoes and corn. Since the prices of the vegetables fluctuate, the company switches between the two crops.
Now assume that while Crop Corporation previously had the possibility to switch between the crops once every two years (=2), the company can now switch every period (every year) (=1) due to a new fertalizer.
Which statement is most likely to be correct?
The value of the option to switch does not change when we have the possibility to switch at every period instead of only at =2. Even if we now decide to switch before =2.
If we still decide to switch the option only at =2, then the value of the option decreases.
The value of the option to switch decreases when we have the possibility to switch at every period instead of only at =2, because more decisions nodes are added.
The value of the option to switch increases when we have the possibility to switch at every period t instead of only at =2, especially when we now decide to switch before =2
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