CHOOSING BETWEEN TWO CROPS Now, assume that the farmer has two options to plant, which both require the same amount of capital ($1,000). Crop 1 (safe): Always generates revenue $1,500 (case above) Crop 2 (risky): Revenues are: Event Revenue Probability of Event Success 2,000 0.6 Fail 0 0.4 (E) What is the farmer's expected profit, expressed in terms of the interest rate, for planting crop 2? (F) What is the moneylender's expected profit, expressed in terms of the interest rate, for planting crop 2? (G) Now, assume the interest rate is set at the moneylender's break-even interest rate for the safe crop (interest rate you obtained from part c). What are the farmer's and money lender's profits for the safe and risky crops using this interest rate? Which crop will the farmer choose to plant? CHOOSING BETWEEN TWO CROPS Now, assume that the farmer has two options to plant, which both require the same amount of capital ($1,000). Crop 1 (safe): Always generates revenue $1,500 (case above) Crop 2 (risky): Revenues are: Event Revenue Probability of Event Success 2,000 0.6 Fail 0 0.4 (E) What is the farmer's expected profit, expressed in terms of the interest rate, for planting crop 2? (F) What is the moneylender's expected profit, expressed in terms of the interest rate, for planting crop 2? (G) Now, assume the interest rate is set at the moneylender's break-even interest rate for the safe crop (interest rate you obtained from part c). What are the farmer's and money lender's profits for the safe and risky crops using this interest rate? Which crop will the farmer choose to plant