Step 3: Find the typical household's optimal consumption basket when its income is $6,400. What is the household's associated level of utility? (10 marks) Step 4: What is the typical household's expected utility if it does not purchase insurance? (4 marks) Step 5: What is the expected payout to the typical household if it does purchase insurance? (4 marks) Step 6: What is a household's maximum willingness to pay for insurance? (Hint: Use the utility function U = pl/64 for this step only.) (8 marks)