Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Questions are in the photo. Thanks Question 3 1 pts Samantha's utility is given by u(x)=In(x). Samantha has $196 in cash, and a bike worth

Questions are in the photo. Thanks

image text in transcribedimage text in transcribed
Question 3 1 pts Samantha's utility is given by u(x)=In(x). Samantha has $196 in cash, and a bike worth $300. There is a 20% probability that Samantha's bike gets stolen. Samantha can get an insurance that reimburses her the value of the bike minus $100 (deductible) in case of theft. What would be, in dollars, the actuarially fair premium for this insurance? Enter below a numerical value in dollars. Round to the second significant decimal if necessary (e.g. if your value is 99.012345, you should enter 99.01).Question 4 1 pts Troy's utility over consumption is given by u(x)=x0.2. If Troy is unemployed, which occurs with probability 90%, his consumption is $36. If Troy is employed, his consumption is $100. How much expected consumption is Troy willing to give up in order to get rid of the risk associated with unemployment? Enter below a numerical value in dollars. Round to the second significant decimal if necessary (e.g. if your value is 99.012345, you should enter 99.01). Enter your number with a negative sign if Troy must receive a higher expected consumption

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Ecopolitical Homelessness Defining Place In An Unsettled World

Authors: Gerard Kuperus

1st Edition

1317232704, 9781317232704

More Books

Students also viewed these Economics questions

Question

What is meant by sweat equity?

Answered: 1 week ago

Question

1. To generate a discussion on the concept of roles

Answered: 1 week ago

Question

6. What information processes operate in communication situations?

Answered: 1 week ago

Question

3. How can we use information and communication to generate trust?

Answered: 1 week ago