Farmers Who Purchase Insurance Against Crop Failures Tend to Be

Multiple Choice

Farmers who purchase insurance against crop failures tend to be pooled with farmers far away.Why might this be the case?

A) The weather in a single geographic area represents idiosyncratic risk, which is diversifiable.
B) The weather in a single geographic area represents systematic risk, which is not diversifiable.
C) The weather in far-flung geographic areas represents systematic risk, which is not diversifiable.
D) The weather in far-flung geographic areas are commonly positively correlated.