ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Chris Traeger is trying to decide whether or not to purchase health insurance. Chris knows that if he is healthy, his wealth will be $2,000 this year. However, if he gets sick his
wealth will only be $500. Chris knows the probability of getting sick is 40%. His utility function is written below.
U = (2)
What is utility if the individual purchases insurance at the actuarially fair price?
25.29 utils
26.46 utils
31.62 utils
18.97 utils
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Transcribed Image Text:Chris Traeger is trying to decide whether or not to purchase health insurance. Chris knows that if he is healthy, his wealth will be $2,000 this year. However, if he gets sick his wealth will only be $500. Chris knows the probability of getting sick is 40%. His utility function is written below. U = (2) What is utility if the individual purchases insurance at the actuarially fair price? 25.29 utils 26.46 utils 31.62 utils 18.97 utils
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