Assume Brandon's benefit function for water is S(W) = ?W and he consumes water both in droughts, WD, or in the rainy season, WR. Assume his current consumption bundle is WD = 36 and WR = 25 and the probability of drought is 0.75. Brandon's certainty equivalent is:
A. 45.75 units of water.
B. 33.06 units of water.
C. 30.5 units of water.
D. 61 units of water.
B. 33.06 units of water.
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