Assume Brandon's Benefit Function for Water Is S(W)= √W and He

question 29

Multiple Choice

Assume Brandon's benefit function for water is S(W) = √W and he consumes water both in droughts,W_D,or in the rainy season,W_R.Assume his current consumption bundle is W_D = 36 and W_R = 25 and the probability of drought is 0.75.Brandon's risk premium is:

• A) 66.31 units of water.
• B) 0.19 units of water.
• C) 33.16 units of water.
• D) 3.20 units of water.

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Definitions:

E.T. Hall

An American anthropologist recognized for his groundbreaking work on the understanding of nonverbal communication and cultural interactions.

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