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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. Dry 700 Wet Wheat 200 Rice 700 200 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) = ln W. What is Demeter's contingent income bundle if she plants only wheat? If she plants only rice? If she plants 50 acres of wheat and 50 acres of rice? (Note: A contingent income bundle is (Ww, Wa), where the “w" subscript indicates "wet" and the "d" subscript indicates "dry".) b. Use your answers in (a) to find an algebraic expression for Demeter's budget constraint over contingent income bundles. What is Demeter's expected utility function? What is her MRS function? а. с.

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. Dry 700 Wet Wheat 200 Rice 700 200 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) = ln W. What is Demeter's contingent income bundle if she plants only wheat? If she plants only rice? If she plants 50 acres of wheat and 50 acres of rice? (Note: A contingent income bundle is (Ww, Wa), where the “w" subscript indicates "wet" and the "d" subscript indicates "dry".) b. Use your answers in (a) to find an algebraic expression for Demeter's budget constraint over contingent income bundles. What is Demeter's expected utility function? What is her MRS function? а. с.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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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. Wet Dry Wheat 200 700 Rice 700 200 1 2 The probability of a wet growing season is ; and the probability of a dry growing season is 3 Demeter's utility function over income is U(W) = In W. What is Demeter's contingent income bundle if she plants only wheat? If she plants only rice? If she plants 50 acres of wheat and 50 acres of rice? (Note: A contingent income bundle is (Ww, Wa), where the "w" subscript indicates "wet" and the "d" subscript indicates "dry".) b. Use your answers in (a) to find an algebraic expression for Demeter's budget constraint over contingent income bundles. What is Demeter's expected utility function? What is her MRS function? а. с.
Transcribed Image Text: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. Wet Dry Wheat 200 700 Rice 700 200 1 2 The probability of a wet growing season is ; and the probability of a dry growing season is 3 Demeter's utility function over income is U(W) = In W. What is Demeter's contingent income bundle if she plants only wheat? If she plants only rice? If she plants 50 acres of wheat and 50 acres of rice? (Note: A contingent income bundle is (Ww, Wa), where the "w" subscript indicates "wet" and the "d" subscript indicates "dry".) b. Use your answers in (a) to find an algebraic expression for Demeter's budget constraint over contingent income bundles. What is Demeter's expected utility function? What is her MRS function? а. с.
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