1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Harrizon [31]
3 years ago
7

Bob's farm harvests corns worth 109 dollars (and nothing else). In each year, there is a 24% chance that a storm will attack and

leaves him with only 28 dollars worth of the corns. Bob's preferences over wealth are represented by . What is the maximum that Bob is willing to pay for full insurance (in unit of thousand dollars)
Mathematics
1 answer:
telo118 [61]3 years ago
8 0

Answer:

<h3> Bob will pay a maximum of 39 thousand dollars for the insurance.</h3>

Step-by-step explanation:

The expected Utility for Bob is given by:  

wealth w is measured in thousands of dollars

E(U) = Probability of storm * Utility if storm happens + (1- Probability of storm) * Utility if there is no storm)

E(U) = 0.33 * ln(28) + 0.67 * ln(109)

=0.33 * 3.3322 + 0.67 * 4.6913

=1.0996 + 3.1432

=4.24

E(U) = 4.24

The wealth corresponding to this expected utility is given by w = exp(E(U)) = exp(4.24) = 69.602

= 70 dollars.

Hence the maximum Bob is willing to pay for the insurance can be given by = 109 - 70

= 39  dollars.

<u> Since it in unit of thousand dollars</u>

<h3>Hence Bob will pay a maximum of 39 thousand dollars for the insurance.</h3>
You might be interested in
25x - 20y= -100<br><br> x-intercept:__________<br> y-intercept:__________
ICE Princess25 [194]

X = (-4, 0)

Y = (0, 5)

8 0
3 years ago
Pleassssssseeeeeeeeeeeeeese
Finger [1]
The ratio is 12:28. Or in fraction form it’s 12/28. You can also simplify it to 3/7
4 0
3 years ago
Read 2 more answers
X-2(x+10)=12 , -15=5(3q-10)-5q <br><br> Please Help
Rashid [163]

Answer:

-4,3.5

Step-by-step explanation:

1st one

x-2x-20 = 12

-x = 32

x=-4

2nd one

-15=15q-50 - 5q

35= 10q

q = 3.5

3 0
2 years ago
What is 106 divided by 5
Bas_tet [7]

Answer:

21.2

Step-by-step explanation:

5 0
2 years ago
Read 2 more answers
Simplify 9x + 18(2x - 6) + 13
Aliun [14]

Answer:

45x-95

Step-by-step explanation:

8 0
3 years ago
Read 2 more answers
Other questions:
  • I don’t understand this question please help
    10·2 answers
  • There are 3 ways you can prove triangles similar without having to use all sides and angles?
    13·1 answer
  • What is 9 hours and 40 minutes before 4:25
    15·1 answer
  • 30 POINTS ANSWER CORRECTLY
    10·2 answers
  • Attachment no explanation only answer
    6·2 answers
  • The grid shows figure Q and it’s image figure Q’ after a transformation:
    10·1 answer
  • WILL GIVE BRANILETs
    9·2 answers
  • What is (16(t^4) (k^12))^(0.25)
    11·2 answers
  • 1. What do you notice about the equations where the end behavior tends towards y = 0 ?
    10·1 answer
  • The following table shows the speeds at which Jeff does 4 activities. For example, biking has a rate of 19 miles in 2 hours. Whi
    5·2 answers
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!