2. As a Wisconsin state senator, you are also responsible for policy regarding insurance markets and Social Security. Use this information to answer the following questions.

a. You wish to maximize the utility of your constituents over their lifetime and are therefore part of a discussion on home insurance (which is required in the US). The representative constituent in Wisconsin has a 10% chance of having serious home damage worth $15,000. What is the actuarially fair premium of the required insurance policy for this representative constituent?

b. The representative constituent makes $60,000/year. Their utility function is U=ln(e). where e represents the consumption of all income (assuming no savings). What is the representative constituent's expected utility without any insurance (using the information from a.)

c. What is the representative constituent's expected utility if the proposed require insurance plan fully insures each constituent?