Suppose Lily's indifference curves are defined as U = √F_S + √F_H,where F_S is consumption during sunny weather and F_H is consumption during a hurricane.Lily receives 64 units of food when it is sunny and 16 units of food when there is a hurricane.If the probability of sunshine is Π = 0.5,the expected consumption is: A) 52 B) 28 C) 40 D) 5

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Quizplus · Accepted Answer

The expected consumption is calculated as the weighted average of consumption under each weather condition, taking into account the probability of each condition. With a probability of sunshine (Π) of 0.5, the expected consumption is (0.5 * 64) + (0.5 * 16) = 32 + 8 = 40.

Suppose Lily's Indifference Curves Are Defined as U = √FS

Suppose Lily's Indifference Curves Are Defined as U = √F_S