A farmer believes there is a 50-50 chance that the next growing season will be abnormally rainy.His expected utility function has the form Expected utility=1/2lnYnr+1/2lnYr,

where Ynr and Yr represent the farmer's income in the states of normal rain and rainy respectively.

a)suppose the farmer must cho...

Dec 18 2020 06:42 PM

1 Approved Answer

Ashish
answered on
December 20, 2020

5
Ratings,(6 Votes)

Answer:

a)

The farmer would breed the crop which has a bigger expected utility. The desired calculations have been shown below:

The desired expected utility of corn is bigger than wheat and hence the farmer would grow corn

b)

If farmer chooses to plant wheat in half field and corn in other half, then his earnings for non...

## 1 Approved Answer

December 20, 2020Answer:

a)

The farmer would breed the crop which has a bigger expected utility. The desired calculations have been shown below:

The desired expected utility of corn is bigger than wheat and hence the farmer would grow corn

b)

If farmer chooses to plant wheat in half field and corn in other half, then his earnings for non...

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