Lukas is a risk-averse farmer. He grows barley on his 1000 acre farm. In a typical year his farm yields 100 bushels of barley per acre. However, in a wet season, the farm only yields 40 bushels per acre. The probability of a typical season is 0.8 and of a wet season is 0.2.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter7: Uncertainty

Section: Chapter Questions

Problem 7.3P

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