1. Suppose a project has two possible outcomes. There is a 40% chance that it brings a profit of 10,000. There is a 60% chance that it brings a profit of 6,400. Suppose a decision makers utility function can be described by U(w)=w^0.5. What is this project's certainty equivalence for this decision maker?
2. A producer in a perfectly competitive industry has a cost function described by TC(q)=1400+4q+0.2q^2. If the market price is 40, what is the profit-maximizing quantity for the producer?
3. A producer in a perfectly competitive industry has a cost function described by TC(q)=1400+4q+0.2q^2. If the market price is 40 and it has already committed to paying the fixed cost, what is the maximum profit for the producer?