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Lillie is a typical homeowner in Clay County (Florida). She has an annual income of I = $45, 000 a year, and, in case of
Lillie is a typical homeowner in Clay County (Florida). She has an annual income of I = $45, 000 a year, and, in case of flood damage, she incurs an annualized loss of L = $25,000. The probability of flood damage in Clay County is p = 0.05 (5%). Lillie's L preferences toward income are represented by the utility function U =
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