Question

indow Help ECON455 Pra ECON455 Mid... XECON455 PS1... ECON455_PS2.. ECON455 PS3. 455 text,pdf 2 17 1.4 Suppose your friend Donna is risk neutral with a utility function over money u(z) . Further suppose that Donna discounts future utility streams according to the following function, which is governed by parameters 6 and p i=1 If δ = .5 and β = .5, which of the following utility steams would given Donna the greatest present discounted value at t=0? 1.5 You are making wine for your daughter's wedding next year. However, you are a new vintner and are worried you won't make a good batch. You are sourcing your grapes from the Russian River Valley in California, where 40% of the crop consists of pinot noir grapes and 60% are lower quality bastard° grapes. If more than 30% of the grapes you purchase are bastardos, your wine will be of too poor quality to serve. Based on past experience, you know you can correctly differentiate the two types of grapes about 75% of the time. Given this information, you should expect to make good wine for your daughter's wedding: a) true (b) false

This is for number 5 actually, sorry for confuse.

Answer 1

1.5

Grapes from the Russian River Valley in California

40% = Pinot noir grapes

60% = Lawer quality Bastardo

If more than 30% of grapes are Bastardo then vine is of poor quality

He can correctly differentiate the two types of grape about 75%

So when he differentiate and select 100 pinot noir grapes 75 % ( 75 ) will be correct and 25 % (25 ) will be law quality Bastardo

From that, he can make a good quality wine because the low-quality Bastardo is less than 25 %.

So the answer is true