Emily and Celeste both work at the same company and earn $10,000 per month. Assume all income is consumed (c). There is a 3% chance that Emily will lose her job and a 6% chance that Celeste will lose her job this month. If either loses her job, she earns $0. Celeste and Emily both have utility function c^1/2 Suppose the government offers partial insurance. The government now pays a benefit of $5000 in the event of job loss and charges a premium of $225. What is the expected cost to the government of this program? Round to two decimal places and do not enter a “$” sign.
Emily and Celeste both work at the same company and earn $10,000 per month. Assume all income is consumed (c). There is a 3% chance that Emily will lose her job and a 6% chance that Celeste will lose her job this month. If either loses her job, she earns $0. Celeste and Emily both have utility function c^1/2 Suppose the government offers partial insurance. The government now pays a benefit of $5000 in the event of job loss and charges a premium of $225. What is the expected cost to the government of this program? Round to two decimal places and do not enter a “$” sign.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Emily and Celeste both work at the same company and earn $10,000 per month. Assume all income is consumed (c). There is a 3% chance that Emily will lose her job and a 6% chance that Celeste will lose her job this month. If either loses her job, she earns $0.
Celeste and Emily both have utility function c^1/2
Suppose the government offers partial insurance. The government now pays a benefit of $5000 in the event of job loss and charges a premium of $225. What is the expected cost to the government of this program? Round to two decimal places and do not enter a “$” sign.
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