“In this third activity, the farmer works during the week as a sunflower farmer, and works in construction during the weekend. Since she is not able to work full time on the farm, the probability of having a GOOD harvest and earning $140 drops to 25%, and the probability of having a BAD harvest and earning only $20 increases to 75%. The individual also earns $20 with certainty as a construction worker (the person earns this $20 from construction in addition to her farm income under both a GOOD and BAD harvest).” I have to find the Expected value of utility, the certainty equivalent and the Risk Premium of this activity. The U(C) = 20C-0.05C^2 . The answers I got were Exp. Value of U = 1120, CE = 67.33 and RP = 2.67. I don’t think it’s right, can you confirm?
https://gpatargeter.com/wp-content/uploads/2021/07/logo.png 0 0 https://gpatargeter.com/wp-content/uploads/2021/07/logo.png 2022-05-14 15:54:242022-05-14 15:54:24In this third activity, the farmer works during the week as a sunflower farmer, and works in construction during the weekend.