Your firm is an average-sized, U.S. flour mill consuming about 6.84 million bushels of wheat and producing about 300 million pounds of flour per year. You have the following data regarding wheat (input) and flour (output) prices per hundred weight (ctwt) at your firm for the previous four years: Year Wheat ($/bu) Input cost ($/ctwt) Flour price ($/ctwt) 2019 6.90 15.73 16.05 2020 4.85 11.06 12.31 2021 6.49 14.80 15.41 2022 6.92 15.78 16.21

a. Historically, what percentage of input price changes are passed on to customers through changes in the price of flour? b. Given your response to part a., what position (buy or sell how many contracts) in wheat futures would hedge next years expected production