Angel Bianca Clara Are Independent Farmers And They Are Deciding Which Crop To Cultivate They Usually Select Tomatoe 1 (57.23 KiB) Viewed 95 times
Angel Bianca Clara Are Independent Farmers And They Are Deciding Which Crop To Cultivate They Usually Select Tomatoe 2 (18.81 KiB) Viewed 95 times
Angel, Bianca, Clara are independent farmers, and they are deciding which crop to cultivate. They usually select tomatoes because it makes $100 in profits with a probability of 100%. A foreigner just visited them and told them they can crop this new vegetable called amaranta. However, it only grows half the time. If someone grows it, they will make $500 in profits with a probability of 50% and $0 with a probability of 50%. The foreigner sells the amaranta seeds at p. But, since she wants to promote amaranta worldwide, she will only charge the seeds if the amaranta grows. In other words, if Angel, Bianca or Clara cultivate amaranta, they will mak $500 - p in profits with a probability of 50% and $0 with a probability of 50%. Assume Angel, Bianca and Clara can only grow either tomatoes or amaranta, but not both at the same time.
10.2 1.0 point possible (graded, results hidden) If the utility function of Bianca with respect to money is UB = w, for which value of p is she indifferent between growing tomatoes and amaranta?
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