a. What is Demeter's contingent income bundle if she plants only wheat? If she plants only rice? If she plants 50 acres of wheat and 50 acres of rice? (Note: A contingent income bundle is (Ww, Wa), where the "w" subscript indicates "wet" and the "d" subscript indicates "dry".) b. Use your answers in (a) to find an algebraic expression for Demeter's budget constraint over contingent income bundles. c. What is Demeter's expected utility function? What is her MRS function?

a. What is Demeter's contingent income bundle if she plants only wheat? If she plants only rice? If she plants 50 acres of wheat and 50 acres of rice? (Note: A contingent income bundle is (Ww, Wa), where the "w" subscript indicates "wet" and the "d" subscript indicates "dry".) b. Use your answers in (a) to find an algebraic expression for Demeter's budget constraint over contingent income bundles. c. What is Demeter's expected utility function? What is her MRS function?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter7: Uncertainty

Section: Chapter Questions

Problem 7.5P

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