Suppose the farmer must choose between two crops that promise the following income prospects: Crop Wheat Corn

Question:

Suppose the farmer must choose between two crops that promise the following income prospects: Crop Wheat Corn TNR $28,000 19,000 $10,000 15,000 7.8 Which of the crops will he plant?

b. Suppose the farmer can plant half his field with each crop. Would he choose to do so? Explain your result.

c. What mix of wheat and corn would provide maximum expected utility to this farmer?

d. Would wheat crop insurance-which is available to farmers who grow only wheat and which costs $4,000 and pays off $8,000 in the event of a rainy growing season-cause this farmer to change what he plants?

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