A) Suppose she faces a gamble in which she wins or loses some amount x with equal probabilities. Determine the amount d that she would pay to avoid the gamble?

B) Suppose instead that she is offered a gamble in which she loses x or wins y with equal probability. Find the maximum possible loss x at which she would accept the gamble.

C) Suppose the person has wealth of $100,000 and faces the gamble in part A). How much would she pay to avoid the gamble if c=2 and x=$10,000?

Consider a person with constant relative risk aversion c and wealth W. u(W)=1cW1c constant relative risk aversion utility function