5 Q1: Tom's utility function is U{x)=x0' . Solve his ArrowPratt coefficient of absolute risk aversion and coefficient of relative risk aversion. Q2: Suppose Jerry's utility function is u(x)=x0'4. Is Jerry more or less risk averse than Tom? Q3: Suppose Ben's utility function is U{x)= Ke'm". Solve his ArrowPratt coefficient of absolute risk aversion. Q4: In the real estate project discussed in class, now suppose individual 1 has risk tolerance r1 = $10,000, and individual 2 has risk tolerance r2 = $40,000. (1) What is the optimal risk sharing rule? (2) What are their respective CE? (3) What is the maximal total CE with joint risk tolerance