There are 2 states. The probability of state i is i, where 1+2=1. There is one risky asset that pays out xi in state i, and one safe asset that pays out R in both states, where x1>R>x2. Consider a consumer who has $m to divide between the risky asset and the safe asset. The consumer maximizes expected utility and is risk averse ( u is strictly concave). (a) Write down the expected utility that the consumer will get if he spends fraction of his income on the risky asset and the rest on the safe asset. (b) Write down an equation that characterizes the optimal level of . (Hint: take the derivative of expected utility and set it to 0 .) (c) If R equals the expected value of the risky asset, what level of is optimal? There are 2 states. The probability of state i is i, where 1+2=1. There is one risky asset that pays out xi in state i, and one safe asset that pays out R in both states, where x1>R>x2. Consider a consumer who has $m to divide between the risky asset and the safe asset. The consumer maximizes expected utility and is risk averse ( u is strictly concave). (a) Write down the expected utility that the consumer will get if he spends fraction of his income on the risky asset and the rest on the safe asset. (b) Write down an equation that characterizes the optimal level of . (Hint: take the derivative of expected utility and set it to 0 .) (c) If R equals the expected value of the risky asset, what level of is optimal