Suppose an individual makes $75,000 of income per year. Her utility function is given by, where x is her income minus expenses. She realizes that there is about a 5% probability that shemay suffer a heart attach in any given year. The cost of treatment will be $40,000 if a heart attack occurs.

She has the option of buying health insurance for $2,200 per year, which will cover all expenses in case of a heart attack. Should she buy this health insurance?

(Note:is a different way of writing the square root of x)