Develop a graphical representation of the choice to buy insurance. Define and highlight on the graph diminishing utility of wealth, expected utility curve, pure premium, amount you'd pay above it. What are you comparing in order to decide whether to buy insurance?

For each of the following purchases, say whether you would expect the dogma of imperfect information to be relatively high or relatively low: Buying apples at a roadside stand Buying dinner at the neighborhood restaurant around the comer Buying a used laptop computer at a garage sale Ordering flowers over the internet for your friend in a different city

Define deductibles, copayments, and coinsurance.