sans {an marks) Eoe Goggles is a deep sea underwater photographer. Her camera and lenses are valued at $4,D. There is a chance of ll] that she will lose her equipment on a dive over the course of the year. Her wealth= including the value of her equipment. is $3,l}{l. Zoe's utility inction is [Kw] = lnw. Eoe wishes to purchase insurance against the risk of lo sing her equipment on a dive. The price per dollar of coverage is T- 3. I). Write an equation to represent Zoe's net wealth in the state of the world where she does not lose her equipment and she has purchased E dollars of coverage. Call this no. Write an equation to represent Zoe's net wealth in the state of the world where she does lose her equipment and she has purchased K dollars of coverage. Call this wr. Combine your equations om parts {a} and [b] to write her budget constraint. What is the price ofa claim on one dollar ofwealth in state ofthe world 1? What is the price of a claim on one dollar of weali in state of the world 2'? What is the slope of her budget constraint, if w: is on the vertical axis and no on the horizontal axis? Provide an expression for Zoe's marginal rate of substitution, Items = dial?2 f 1 . If}r = {1.113, how much insurance coverage K will Eoe buy? What is her total premium 1K in that case? IE, instead; the price of insurance is actuarially ir, show that Zoe will purchase full insurance: K = $4,. Draw a diagram depicting Eoe's budget constraint and her optimal choice of w1 and w