Question

ht Moody is the manager of a large farm with arable land. For greater efficiency, Dwight always 100 adces farm to growing one crop at a time. He now needs to 99. Dwight make a decision on which one of tour crops to grow during the ming growing season. For each of these crops, Dwight has obained the following estimates of crop yields and net incomes per bushel under various weather conditions

Answer 1

SOLUTION

Expected payoffs
Crop 1: (20 * 0.3 + 35 * 0.5 + 40 * 0.2) * $1.00 = $31.50
Crop 2: (15 * 0.3 + 20 * 0.5 + 30 * 0.2) * $1.50 = $30.75
Crop 3: (30 * 0.3 + 25 * 0.5 + 25 * 0.2) * $1.10 = $26.50
Crop 4: (40 * 0.3 + 40 * 0.5 + 40 * 0.2) * $0.50 = $20.00

Dwight Moody should choose crop 1 with $31.50 payoff