Consider an insurance problem like those covered in class, but with three possible states. The consumer will receive income of either 30, 20, or 10, each with probability 1/3. Expected utility is log and additively separable across states. There is a zero-profit, risk neutral insurer from which the consumer can purchase insurance against low income. Determine the insurance premium paid by the consumer and the optimal insurance benefit in each state.

5. Consider an insurance problem like those covered in class, but with three possible states. The consumer will receive income of either 30 , 20 , or 10 , each with probability 1/3. Expected utility is log and additively separable across states. There is a zero-profit, risk neutral insurer from which the consumer can purchase insurance against low income. etermine the insurance premium paid by the consumer and the optimal insurance benefit in each state