Question your utility function is u radic2c where c is the, Ask an Expert

Economics

Question: Your utility function is U = √2C, where C is the amount of consumption that you have in any given period. Your income is $45,000 per year and there is a 2 percent chance that you will be involved in a catastrophic accident that will cost you $33,750 next year.

a. What is your expected utility?

b. Calculate an actuarially fair insurance premium. What would your expected utility be if you were to purchase the actuarially fair insurance premium?

c. What is the most that you would be willing to pay for insurance, given your utility function?

View complete question

Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M92598292

Have any Question?Write your Review or question?

Related Questions in Microeconomics

Question - a collectivity consists of three persons a b c

Question - A collectivity consists of three persons, A, B, C. Demand for some collectively provided service, x, being for person A, P = 40/x; for person B, P = 20/x; and for person C, p = 10/x. The marginal cost is 10. ( ...

Question consider the heckscher-ohlin model from the slides

Question: Consider the Heckscher-Ohlin model from the slides in the case of no factor substitution. The production technology of food and cloth are: QF = min [LF/3 , KF] QC = min [KC/3 , LC]. The home country has 100 uni ...

Question suppose coffee f and cream c are perfect

Question: Suppose coffee (F) and cream (C) are perfect, two-for-one complements and Jack spends his budget of $12 per day on these two goods. That is, assume that Jack likes one ounce of cream for every two ounces of cof ...

Question - lolita an intelligent and charming holstein cow

Question - Lolita, an intelligent and charming Holstein cow, consumes only two goods, cow feed (made of ground corn and oats) and hay. Her preferences are represented by the utility function U(x, y) = x - x2/2+y, where x ...

Question say alcohol is strictly illegal in your dorm and

Question: Say alcohol is strictly illegal in your dorm and any student caught supplying or drinking it faces automatic expulsion from school. As you might expect, some students will not be deterred by the threat. It is, ...

Question an equipment costs 800000 and has a service-life

Question: An equipment costs $800,000 and has a service-life of 10 years with a salvage value of $20,000. The equipment will bring a before tax income of $200,000 every year. Annual operations and maintenance will be $10 ...

Question this paper must only be written off of research

Question: This paper must only be written off of research. This cannot display stories of what happened to you or what happened to someone else. Make sure it is all research. Not opinions bust solid evidence of an argume ...

Question suppose that the table presented below represents

Question: Suppose that the table presented below represents production and cost data from a single firm. The table displays the level of labor (L) and capital (K) chosen by the firm in each year from 2009-2017, along wit ...

The number has jumped 60 since last year when prices were

The number has jumped 60% since last year. When prices were falling, the number fell from 2,000 in 2015 to only 480 in 2016. For the week of March 10, 2017 the number was at 762. The elasticity of the supply is around 0. ...

Question a deposit of 1000 is planned for the end of each

Question: A deposit of 1000 is planned for the end of each year into an account paying 6% per compounded annually. The deposits were not made in years 8 and 9 but were made each year until year 30 for all other years. Wh ...

4,153,160 Questions Asked
13,132 Experts
2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Recent Questions

Ask Microeconomics Expert