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I need help with the diagrams, I understand the other math. Hannah is an expected utility maximize]? and has a VNM utility function 15(3) =

I need help with the diagrams, I understand the other math.

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Hannah is an expected utility maximize]? and has a VNM utility function 15(3) = ln[:c) where J: > 0 is her nal wealth level tomorrow. Hannah owns an ice cream shop and has to decide today for how many hours h 3 D she opens the shop tomorrow. She has an initial wealth level of w > 1]. With probability .2: the weather will be good and then she earns $50 per opening hour. With probability % the weather will be bad and then she earns $10 per opening hour. She has costs of $20 per opening hour. The maximum number of hours for which she can open the Shop is 12. (a) For how many hours it does Hannah choose to open the shop, depending on her initial wealth levei? (b) Howr do the optimal opening hours change if her initial wealth level increases? Relate this to Hannah's risk attitude. (:3) Set up the two-states-oftheworld diagram such that point {31, 3:2) shows the combination of nal wealth level 331 at good weather and nai wealth level 2:; at bad weather. Draw the set of (1:1, 3:2) that are \"risk-free". [Do not forget to label everything that you draw in this diagram!) From now on, assume that w = $120. (d) In the diagram, i. draw the set of (11:1, 3:2) that Hannah can achieve by varying it between 0 and 12. ii. mark the nal wealth ievel combination :3\" = {31,32} that results from choosing the optimal hours if\" for 11.? = $120. iii. sketch her indierence curve through 3*

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