Find expected values, standard deviations and return to risk ratios.
-A farm owner in upstate New York who grows summer vegetables (e.g. tomatoes)
Must decide whether to employ additional pickers this season. If he does, he could hire
Either migrant workers or local teenagers who need summer employment. The migrant
Workers are more experienced, faster, but more expensive. Although the teenagers will
Work for less, they lack experience and tend to damage plants and produce. His profits
Depend on the growing season as shown below. Suppose the farmer's almanac predicts
The probability of a good growing season this year to be .75. If the farmer is risk averse,
He would
A) hire migrant workers.
B) hire teenagers.
C) do not do any extra hiring.
D) make the same decision as he would using the expected value approach.
E) give up farming.

Question

Find expected values, standard deviations and return to risk ratios.
-A farm owner in upstate New York who grows summer vegetables (e.g. tomatoes)
Must decide whether to employ additional pickers this season. If he does, he could hire
Either migrant workers or local teenagers who need summer employment. The migrant
Workers are more experienced, faster, but more expensive. Although the teenagers will
Work for less, they lack experience and tend to damage plants and produce. His profits
Depend on the growing season as shown below. Suppose the farmer's almanac predicts
The probability of a good growing season this year to be .75. If the farmer is risk averse,
He would 
A) hire migrant workers. 
B) hire teenagers. 
C) do not do any extra hiring. 
D) make the same decision as he would using the expected value approach. 
E) give up farming.

Quizplus · Accepted Answer

The Answer of Find expected values, standard deviations and return to risk ratios.
-A farm owner in upstate New York who grows summer vegetables (e.g. tomatoes)
Must decide whether to employ additional pickers this season. If he does, he could hire
Either migrant workers or local teenagers who need summer employment. The migrant
Workers are more experienced, faster, but more expensive. Although the teenagers will
Work for less, they lack experience and tend to damage plants and produce. His profits
Depend on the growing season as shown below. Suppose the farmer's almanac predicts
The probability of a good growing season this year to be .75. If the farmer is risk averse,
He would 
A) hire migrant workers. 
B) hire teenagers. 
C) do not do any extra hiring. 
D) make the same decision as he would using the expected value approach. 
E) give up farming.

Find Expected Values, Standard Deviations and Return to Risk Ratios