An individual has 40,000 in income per year. The person will get sick with probability 0.1. If he doesget sick, the medical bills will total 30,000. The following tables shows the utility derived fromcertain amounts of income:Income Utility40,000 20037,000 19535,000 19030,000 17020,000 14010,000 100At the actuarially fair rate, will the person choose to buy insurance or face the risk of goinguninsured? Explain why.

The probability that the person will get sick is 0.1 percent. The income of the individual is given…

Answered: An individual has 40,000 in income per…

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter7: Uncertainty

Section: Chapter Questions

Problem 7.5P

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What are some of the metrics economists use to measure health outcomes?
An individual has 40,000 in income per year. The person will get sick with probability 0.1. If he does get sick, the medical bills will total 30,000. The following tables shows the utility derived from certain amounts of income: Income Utility40,000 20037,000 19535,000 19030,000 17020,000 14010,000 100Considering the probability of illness, what is the expected utility of income without insurance? Show your work.
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Please do a iv, and b i and ii
Question 1: Using Figure 11.1, illustrate the probability that someone will obtain insurance for treatment for: (a) a hangnail; (b) a broken arm; (c) a bad hair day; (d) viral meningitis
What is insurance
Uz U3 U. Us 30 42 54 80 Income The consumer has $42 saved. This gives the consumer a utility of They consider an investment project where there is an 76% chance they lose $12 and 24% chance they win $38. This would give them a utility of . The consumer accept this investment. They consider another investment project that will give them an expected income of $60. The consumer + accept this investment. For this consumer to accept an investment project it must have an income equal to, or greater than $
A5
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not use ai please
A. From the graph below explain how an insurance plan which provides the buyer a $15,000 wealth level, regardless of any uncertain event, is a good deal for the buyer? In other words, what does the distance between points D’ and C’ represent? Note we are referring to D prime, not D. B. Considering the graph below, can you explain the difference between expected utility and certainty utility?

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