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. Lisa just inherited a vineyard from a distant relative. In good years, she earns $10,000 from the vineyard. In bad years, she earns only
. Lisa just inherited a vineyard from a distant relative. In good years, she earns $10,000 from the vineyard. In bad years, she earns only $900. She estimates that the probability of a good year is 70%. Suppose Lisa has a utility function U(w) = w, where w is her wealth. Assume that she has 0 initial wealth.
Calculate the expected value of her earnings from the vineyard (round to 2 decimals).
Calculate the expected utility of her earnings from the vineyard (round to 2 decimals).
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