1. Suppose a. consumer satises the V011 NeumannMorgenstern axioms and is (strictly} risk averse. She initially has monetary.r wealth to. There is some probability p that she will lose an amount L. The consumer can purchase insurance that will pay her q dollars in the event that she incurs this loss. The amount she has to pay for this insurance is my; here 7r is the premium per dollar of coverage. (a) How much insurance will the consumer purchase? That is, what is the choice of q as a function of the arameters w, L and Tr that maximizes her ex ected utilit ? Note: P P: P 3' It's ne to just give an equation that implicitly denes (1.} (h) In the special case where the insurance is actuaally fair [that is, 11' = 3?), how much insurance will the consumer purchase? What about if 71' > 31'? Discuss