Exhibit 9-1
a Farmer Must Decide Whether to Take Protective

question 23

Essay

Exhibit 9-1
A farmer must decide whether to take protective action to limit damage to his grapefruit crop in the event that the overnight temperature falls to a level well below freezing. If the temperature drops too low he runs the risk of losing his entire crop, valued at $75,000. Based on the National Weather Service, the probability of such a temperature drop is 60%. He can insulate his crop by spraying water on all the trees, which will cost $20,000. This action might succeed in protecting the crop, with the following $$\begin{array} { l l } \text { Probability } & \text { Damage } \\0.30 & \$ 0 \\0.15 & \$ 5,000 \\0.10 & \$ 10,000 \\0.15 & \$ 15,000 \\0.30 & \$ 20,000\end{array}$$
-Refer to Exhibit 9-1.Find the highest cost of insulating the grapefruits for which the farmer prefers to insulate his crop.

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Definitions:

Empirical Reasoning

It involves drawing conclusions based on observation or experimentation.

Comparative Reasoning

The process of analyzing and evaluating the similarities and differences between entities to draw a conclusion or make a decision.

Ideological Reasoning

The process of forming judgments and ideas based on a set ideology or set of beliefs, rather than empirical evidence or objective truth.

Independent Verification

The process of having a third party check or validate findings or results to ensure their accuracy or authenticity.