Answer:
E) A is higher, and F is lower.
Explanation:
If the farmer is risk averse, he tends to always take the decision which will minimize risk.
His financial assets (A) are not affected by floods, so the higher they are, less likely he will be to pay for flood insurance.
If P is the likelihood of a flood happening, the lower the risk P, then the lower the willingness to pay for flood insurance will be.
If F is lower, then the farmer is unlikely to spend money insuring the farm.
Therefore, analyzing the answer choices, the only that fits the above description is E) A is higher, and F is lower.
