Use the figure shown to answer the questions below Uz U3 U, 24 32 45 72 Income Currently the consumer has $72. If there is an accident their income will be $24. The probability of an accident is

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Chapter1: Making Economics Decisions
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Use the figure shown to answer the questions below
U,
U3
U.
24
32
45
72
Income
Currently the consumer has $72. If there is an accident their income will be $24. The probability of an accident is
0.5625. This means the consumer has an expected income of $
Suppose an insurance firm offered the consumer a fair insurance contract, that pays them $48 if an accident
occurred. This contract would cost the consumer $
and their utility would be
instead of
The most an insurance firm could charge for this insurance contract is $
ES Utility
Transcribed Image Text:Question 12 Not yet answered P Flag question Use the figure shown to answer the questions below U, U3 U. 24 32 45 72 Income Currently the consumer has $72. If there is an accident their income will be $24. The probability of an accident is 0.5625. This means the consumer has an expected income of $ Suppose an insurance firm offered the consumer a fair insurance contract, that pays them $48 if an accident occurred. This contract would cost the consumer $ and their utility would be instead of The most an insurance firm could charge for this insurance contract is $ ES Utility
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