Return to the example from exercise 17.1, where consumption levels differ depending on whether outcome A or outcome B occurs (where A occurs with probability and B with probability (1-)). In the absence of insurance, these outcomes are x1 and x2 respectively (with x1

Draw a graph with consumption xA in outcome A on the horizontal and consumption xB in outcome B on the vertical axis. Then locate (x1,x2)the consumption levels you will enjoy in the absence of insurance depending on which outcome occurs.