Multiple Choice
Suppose Lily's indifference curves are defined as U = √FS + √FH,where FS is consumption during sunny weather and FH is consumption during a hurricane.Lily receives 64 units of food when it is sunny and 16 units of food when there is a hurricane.What is the certainty equivalent of the expected food consumption bundle if the probability of sunshine is Π = 0.5?
A) 6
B) 12
C) 25
D) 36
Correct Answer:
Verified
Correct Answer:
Verified
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