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Actuarilly fair premium

What is the actuarilly fair premium for full coverage for a treatment. Find the utility with full insurance for the treatment and how much would the individual be willing to pay to obtain such insurance than the fair premium (find out the risk premium)?

Utility function is given by U=10(X1/3)
CUrrent income is 64000, 10% chance of contracting the disease, cost of treatment $32000

 

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M928797

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