Multiple Choice
Consider the following to answer the question(s) below:
A farm owner who grows summer vegetables (e.g. tomatoes) must decide whether to employ additional pickers this season. If he does, he could hire either migrant workers or local teenagers who need summer employment. The migrant workers are more experienced, faster, but more expensive. Although the teenagers will work for less, they are not as experienced and tend to damage plants and produce. His profits, taking into account losses from unpicked perished or damaged produce, depend on whether there is a good or bad growing season. The payoffs are shown in the table below.
-If the farmer is risk averse, he would
A) hire migrant workers.
B) hire teenagers.
C) not do any extra hiring.
D) make the same decision as he would using the expected value approach.
E) give up farming.
Correct Answer:

Verified
Correct Answer:
Verified
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