Question: Suppose that Maria seeks to maximize the expected value of the benefit function W(F) = 1,000 F - F2 (for values of F below 100).

Suppose that Maria seeks to maximize the expected value of the benefit function W(F) = 1,000 F - F2 (for values of F below 100). Maria consumes 50 kg of food when it's sunny and 30 kg when there's a hurricane. There's a 25 percent chance of a hurricane. Compute her expected payoff, her expected utility, the certainty equivalent of her risky consumption bundle, and the risk premium

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