=+cc. Will Beth purchase the insurance in part b if she is risk-neutral?

d. Discuss a possible moral hazard problem facing Beth’s insurance company if she purchases the insurance. 7. Hugh’s income is currently $5,000. His utility function is shown in the accompanying table.

Income ‘Total utility (utils)

So 0)

1,000 100 2,000 140 3,000 166 4,000 185 5,000 200 6,000 212 7,000 222 8,000 230 9,000 236 10,000 240