3. Demeter has 100 acres of land on which she can plant wheat or rice. The following table shows the income per acre that each crop will produce, both for a wet growing season and a dry growing season. Wheat Rice Wet 200 700 2 The probability of a wet growing season is and the probability of a dry growing season is Demeter's utility function over income is U(W) = In W. D. C. d. Dry 700 200 Wat is Donster's cutimmeat income bundle if she plants only when If she plants only rice? If she plants su acres of what and i-end 50 acres of sinal contingent income VIIMEI STTHSCHIPt indicates "wet" an bundle is (W... WZ indicates “dw,99 \ -9773 WHICC te Use van over contingent teeme bundles What is Demeter´s expected utility function? What is her MKS function? What two conditions hold at Demeter's expected utility-maximizing contingent income bundle? e. Solve the two conditions in (d) to find Demeter's expected utility-maximizing mayo (6) to find an algebraic expression for Demeter's budget constraint contingent income bundle. f. To achieve the bundle in (e), how many acres of each crop does Demeter plant?
3. Demeter has 100 acres of land on which she can plant wheat or rice. The following table shows the income per acre that each crop will produce, both for a wet growing season and a dry growing season. Wheat Rice Wet 200 700 2 The probability of a wet growing season is and the probability of a dry growing season is Demeter's utility function over income is U(W) = In W. D. C. d. Dry 700 200 Wat is Donster's cutimmeat income bundle if she plants only when If she plants only rice? If she plants su acres of what and i-end 50 acres of sinal contingent income VIIMEI STTHSCHIPt indicates "wet" an bundle is (W... WZ indicates “dw,99 \ -9773 WHICC te Use van over contingent teeme bundles What is Demeter´s expected utility function? What is her MKS function? What two conditions hold at Demeter's expected utility-maximizing contingent income bundle? e. Solve the two conditions in (d) to find Demeter's expected utility-maximizing mayo (6) to find an algebraic expression for Demeter's budget constraint contingent income bundle. f. To achieve the bundle in (e), how many acres of each crop does Demeter plant?
Chapter7: Uncertainty
Section: Chapter Questions
Problem 7.8P
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