Q1 (3 points) You have $100, but you might lose $36 with a probability of 20%. Write down the equation of the iso-expected-income line you are on, and draw it in a diagram measuring your income in the good state of nature. What is its slope? Q4 (3 points) Plot, in the same diagram (a new diagram): i. the indifference curve you are on, ii. the iso-expected-income you are on, and iii. the insurance line. Is the insurance offered by Novel Insurance fair? Explain. 02 (3 points) Your utility of money is u(y) : . What is the slope of the indifference curve you are on? Sketch your indifference curve in the diagram you used to answer question 1. 06 (3 points) What is the maximum insurance premium per dollar of coverage would you pay to get insured by from Novel Insurance? Q3 (3 points) Novel Insurance offers a new kind of insurance contracts: for each dollar of coverage you have to pay a premium of 30 cents. Unlike the usual insurance contracts, you pay the premium only in the good state of nature (when you do not lose $36). In the bad state of nature (when you lose $36) you do not pay any insurance premiums. Derive the equation of the insurance line offered by Novel insurance. 05 (3 points) Are you buying any insurance? If yes, show graphically how much coverage would you buy