Multiple Choice
Suppose Brandon's indifference curves are defined as U = (3/4) √FS + (1/4) √FH,where FS is consumption during sunny weather and FH is consumption during a hurricane.Further suppose Brandon receives 64 units of food when it is sunny and 16 units when there is a hurricane.What is the risk premium if the probability of sunshine is Π = 0.75?
A) 52 units of food
B) 24 units of food
C) 49 units of food
D) 3 units of food
Correct Answer:
Verified
Correct Answer:
Verified
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