7. Ann can organize a concert in either of two locations: Club or Park. If the concert is in the Club and it is not raining, she makes a profit of $4; if it is raining outside, she makes a profit of $1. If the concert is at the Park, and it is not raining, she makes a profit of $0; if it is raining outside, she makes a profit of $9. Ann is risk averse and her utility function is 05, where are the profits she makes. Let P be the probability that it rains the day of the concert. Find the number P that makes Ann indifferent between organizing the concert in the Club or at the Park.

7. Ann can organize a concert in either of two locations: Club or Park. If the concert is in the Club and it is not raining, she makes a profit of $4; if it is raining outside, she makes a profit of $1. If the concert is at the Park, and it is not raining, she makes a profit of $0; if it is raining outside, she makes a profit of $9. Ann is risk averse and her utility function is 05, where are the profits she makes. Let P be the probability that it rains the day of the concert. Find the number P that makes Ann indifferent between organizing the concert in the Club or at the Park.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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