Lata gets to consume 16 units of food (FS) if there is sunshine (probability 3/4) and 4 units of food (FH) if there is hurricane (probability 1/4). Will she accept a bundle (9,25) with same probabilities? Find out the equation of indifference curve that passes through the new bundle. Also calculate certainty equivalent and risk premium for the new bundle. Explain your answer with the help of appropriate diagrams if her benefit function for food is given by (i) W(F) = F^2 (ii) W(F) = F^1/2 (iii) W(F) = F

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