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 W5, where are the profits she makes. Let be the probability that it rains the day of the concert. Find the number that makes Ann indifferent between organizing the concert in the Club or at the Park.
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 W5, where are the profits she makes. Let be the probability that it rains the day of the concert. Find the number that makes Ann indifferent between organizing the concert in the Club or at the Park.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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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 W5, where are the profits she makes. Let be the probability that it rains the day of the concert. Find the number that makes Ann indifferent between organizing the concert in the Club or at the Park.
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