Now is January 2016. Sophie will buy 50,000 pounds of lean hog in March 2016. To hedge the hog price, she buys a March 2016 maturity lean hog contract at the future price of $1.20 per pound. Suppose that when the contract matures in March 2016, the market price of hog turns out to be $1 per pound. This future contract calls for purchase of 50,000 pounds.

a) Calculate Sophie's payoff from purchasing 50,000 pounds of hogs in the spot market in March 2016 (note: a payment for purchase is a negative payoff)

b) Calculate Sophie's payoff from the future market in March 2016

c) Calculate Sophie's total payoff from both the spot and future markets in March 2016

d) If the market price of hog goes up to $1.50 per pound in March 2016, what's Sophie's total payoff?