Consider the Following to Answer the Question(s) Below

question 29

Multiple Choice

Consider the following to answer the question(s) below:
A farm owner who grows summer vegetables (e.g. tomatoes) must decide whether to employ additional pickers this season. If he does, he could hire either migrant workers or local teenagers who need summer employment. The migrant workers are more experienced, faster, but more expensive. Although the teenagers will work for less, they are not as experienced and tend to damage plants and produce. His profits, taking into account losses from unpicked perished or damaged produce, depend on whether there is a good or bad growing season. The payoffs are shown in the table below.
-Suppose the Farmers' Almanac predicts the probability of a good growing season this year to be 0.75. What is the expected value of hiring teenagers?

• A) $62,500
• B) $52,500
• C) $46,250
• D) $12,990
• E) $20,313

---

Definitions:

Opportunity Cost

The highest-valued alternative forgone as a result of making a decision to pursue a certain course of action.

Automobiles

Vehicles propelled by an internal combustion engine or electric motor, used for the transportation of people and goods on road surfaces.

Tractors

Agricultural machinery used for plowing, tilling, planting, and other tasks in farming, essential for modern agriculture.

Fair Trade

A trading partnership, based on dialogue, transparency, and respect, that seeks greater equity in international trade. It contributes to sustainable development by offering better trading conditions to, and securing the rights of, marginalized producers and workers.