A farmer believes there is a 50-50 chance that the next growing season will be abnormally rainy. Let YNr and YR represent the farmer's income in the states of "normal rain" and "rainy," respectively. If the farmer's objective is to maximize expected income which of the following will he/she choose

A farmer believes there is a 50-50 chance that the next growing season will be abnormally rainy. Let YNr and YR represent the farmer's income in the states of "normal rain" and "rainy," respectively. If the farmer's objective is to maximize expected income which of the following will he/she choose

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter7: Uncertainty

Section: Chapter Questions

Problem 7.8P

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Question

A farmer believes there is a 50-50 chance that the next growing season will be abnormally
rainy. Let YNR and Yr represent the farmer's income in the states of "normal rain" and
"rainy," respectively. If the farmer's objective is to maximize expected income which of the
following will he/she choose
A. Maize
B. Wheat
C. Neither maize nor wheat
D. Both maize and wheat
ix.

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