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

question 11

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.What is the certainty equivalent of the expected food consumption bundle if the probability of sunshine is Π = 0.5?

• A) 6
• B) 12
• C) 25
• D) 36

---

Definitions:

Negotiators

Persons involved in discussions aimed at reaching an agreement or resolving a dispute.

Across Borders

Referring to activities or issues that involve or affect more than one country, transcending national boundaries.

Disadvantages

The unfavorable or detrimental aspects related to a situation, action, or condition.

Induce

To lead or bring about a particular action or condition through influence or persuasion.