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I need help answering this question from Health Economics. QUESTION ONE The table below presents the Sililo's monthly income and the corresponding uncertainties. State Probability
I need help answering this question from Health Economics.
QUESTION ONE The table below presents the Sililo's monthly income and the corresponding uncertainties. State Probability Income (Y) Utility (U) Sick 0.4 2.500 U(2,500) Healthy 0.6 4.900 U(4,900) Sililo's utility function is given by U= In(4Y), where Y is income. a. Calculate Sililo's marginal utility (MU) of wealth when sick? When well? [4 marks] b. Is Sililo risk averse or risk neutral or a risk lover? [2 marks] c. Calculate Sililo's expected wealth with no insurance? [2 marks] d. Calculate Sililo's my expected utility with no insurance? [2 marks] e. What is Sililo's actuarially fair premium? [2 marks] f. What is that maximum premium Sililo's would be willing to pay to shed the risk? [3 marks]Step by Step Solution
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