Econ 240A Problem Set 1资料.pdfVIP

Econ 240A: Problem Set 1 Solutions to Selected Problems from Chapter 1 Chuan Goh 24 January 2001 1. Note that without insurance, Cab’s optimal decision when receiving a forecast of early rainfall is to harvest early, which gives him a revenue net of the cost of purchasing the forecast of $ 29000. When the forecast is for late rainfall, Cab will harvest late and earn an expected net revenue of 1 $10000 + 4 $40000 $1000 = 5 5 $33