Explanation with answers plz 2. Consider an expected utility maximizing risk-averse individual with the utility-of-wealth function u(w) and initial wealth wo. There is a lottery that pays G withprobability p and B with probability 1 – p, with G > B.-(a) Suppose the individual already owns the ticket to this lottery, in addition to herinitial wealth. Find an equation that implicitly defines the smallest price P, suchthat she would be willing to sell the ticket for this price.(b) Now suppose she does not initially own the ticket, and has to consider whetherto buy one. Find an equation that implicitly defines the highest price P, that shewould be willing to pay to buy the ticket.(c) Calculate P, and P, if the individual's utility function of his final wealth w isu(w) = √w, and G = 10, B = 0, wo = 10, and p = 0.5.

a) If there is no difference between the estimated expected utility while holding the ticket and the utility when selling it, that is the minimum price at which the person will be prepared to sell it.b) The estimated expected usefulness prior to ticket sale if the ticket is purchased for price Ps, the expected utility is Consequently, the minimum Ps equation is = b) Therefore, the estimated expected utility prior to purchasing the ticket and Assuming the ticket is purchased for price Pb, the anticipated utility is Therefore, equation for maximum Pb is = c) Given, w0=10, p=0.5, B=0, G=10 We get 0.5(sqrt(20)+sqrt(10) = 3.817 = sqrt(10+Ps) So, Ps = 4.57 Similarly solving for Pb we get sqrt(10) = 0.5*sqrt(20-Pb) + 0.5*sqrt(10-Pb) so, Pb = 4.38