Suppose Lily's Indifference Curves Are Defined as U = √F_S

question 56

Multiple Choice

Suppose Lily's indifference curves are defined as U = √F_S + √F_H,where F_S is consumption during sunny weather and F_H is consumption during a hurricane.Lily receives 64 units of food when it is sunny and 16 units of food when there is a hurricane.If the probability of sunshine is Π = 0.5,the expected consumption is:

• A) 52
• B) 28
• C) 40
• D) 5

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