Assume Brandon's benefit function for water is and he consumes water both in droughts,W_D and in the rainy season,W_R.Assume his water bundle is W_D = 400 and W_R = 100 and the probability of drought is 0.75.Expected water consumption is A) 500 B) 250 C) 325 D) 175

Question

Quizplus · Accepted Answer

To find the expected water consumption, we need to calculate the weighted average of water consumption for both seasons. 
Expected water consumption = (0.75 * 400 * 11ea8a01_e41b_836d_8b44_c9cd9879a88d_TB1639_11(400)) + (0.25 * 100 * 11ea8a01_e41b_836d_8b44_c9cd9879a88d_TB1639_11(100))
Expected water consumption = (0.75 * 400 * 8) + (0.25 * 100 * 6)
Expected water consumption = 2400 + 150
Expected water consumption = 2550
Therefore, the best choice is C, and Brandon's expected water consumption is 325.

Assume Brandon's Benefit Function for Water Is and He