Consider Karl who has an initial wealth of $600,000. Over the next year, Karl faces a 5% risk of getting a grave illness that will cost $200,000 to treat. a. What is the actuarially fair price of insurance? Explain reasoning. b. What is his expected utility without insurance if U(Wealth=400,000)=300 and U(Wealth=600,000)=400? c. Karl is willing to pay up to $12,500 for insurance that will cover the entire cost of care should he become. d. What does this tell you about Karl? e. Draw a utility of wealth curve for Karl that is consistent with the information in parts a-c.